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Taxes???
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<blockquote data-quote="Alan" data-source="post: 172951" data-attributes="member: 378"><p>It's just as Mitchwi said, money in (income) minus money out(expenses) gives you your profit (taxable income). If you have a negitive profit figure (lost money) then of course you pay no taxes. Everything you spend on your farm/ranch is expenses and tax deductible. But income comes in other ways than just selling a product. Say your'e buying land, barn, truck, equipment, or other large item that you pay for over a period of years. While you get to depricate those items (except land), meaning the tax man realizes their value goes down through the years, so you get a tax credit for the amount of money the item dropped in value that year. (this is a tax credit, or expense). But as you pay off these items over the years the principle you paid of during the tax year is considered income and taxable. Just because I'm on a roll here's one other item, say that you completly pay your truck off over a 5 year period. During that five years you have paid taxes on the principle during each year and took the tax deduction on the deprecation over each year. Now you want a new truck so you tade in or sell your old truck, the money you sold the truck for is considered income and is taxable even through it is paid off and fully depricated, it's called recooped deprication (sp).</p><p></p><p>This is not tax advice and may not be 100% accurate, but it is pretty close if not.</p><p></p><p>Alan</p></blockquote><p></p>
[QUOTE="Alan, post: 172951, member: 378"] It's just as Mitchwi said, money in (income) minus money out(expenses) gives you your profit (taxable income). If you have a negitive profit figure (lost money) then of course you pay no taxes. Everything you spend on your farm/ranch is expenses and tax deductible. But income comes in other ways than just selling a product. Say your'e buying land, barn, truck, equipment, or other large item that you pay for over a period of years. While you get to depricate those items (except land), meaning the tax man realizes their value goes down through the years, so you get a tax credit for the amount of money the item dropped in value that year. (this is a tax credit, or expense). But as you pay off these items over the years the principle you paid of during the tax year is considered income and taxable. Just because I'm on a roll here's one other item, say that you completly pay your truck off over a 5 year period. During that five years you have paid taxes on the principle during each year and took the tax deduction on the deprecation over each year. Now you want a new truck so you tade in or sell your old truck, the money you sold the truck for is considered income and is taxable even through it is paid off and fully depricated, it's called recooped deprication (sp). This is not tax advice and may not be 100% accurate, but it is pretty close if not. Alan [/QUOTE]
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