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Taxes???
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<blockquote data-quote="mhoback" data-source="post: 173468" data-attributes="member: 2917"><p>Not even close. When you buy a piece of equipment, you capitalize the purchase price of the asset. You then depreciate the cost of the asset over the life of it (usually 7 for equipment, 5 for cattle, and 5 for pickups.) If you have financed the asset, when you make a payment on it, the only tax implication is you can deduct the interest. The princiapal you paid is NOT taxable income. If you sell an asset, you offset the sale proceeds with any remaining basis (undepreciated cost) of the asset. Trades are screwy. If you trade the asset in on a new piece of equipment, you actually keep depreciating the traded asset over its remaining life until it is fully depreciated. The cost of the new asset is the "boot", or cash paid for it. It is depreciated over its useful life, be it 5 or 7 years. </p><p></p><p>You cannot deduct losses on raised cattle that died because you have already deducted all of the costs of the animal (feed, vet, etc.) If a cow that you bought dies, you can deduct any remaining basis in the year it dies. </p><p></p><p>If you buy pairs in 05 and sell the calves in 06, any cost you assigned to the calves is carried over to 06 and deducted in the year of the sale to offset the income from them.</p></blockquote><p></p>
[QUOTE="mhoback, post: 173468, member: 2917"] Not even close. When you buy a piece of equipment, you capitalize the purchase price of the asset. You then depreciate the cost of the asset over the life of it (usually 7 for equipment, 5 for cattle, and 5 for pickups.) If you have financed the asset, when you make a payment on it, the only tax implication is you can deduct the interest. The princiapal you paid is NOT taxable income. If you sell an asset, you offset the sale proceeds with any remaining basis (undepreciated cost) of the asset. Trades are screwy. If you trade the asset in on a new piece of equipment, you actually keep depreciating the traded asset over its remaining life until it is fully depreciated. The cost of the new asset is the "boot", or cash paid for it. It is depreciated over its useful life, be it 5 or 7 years. You cannot deduct losses on raised cattle that died because you have already deducted all of the costs of the animal (feed, vet, etc.) If a cow that you bought dies, you can deduct any remaining basis in the year it dies. If you buy pairs in 05 and sell the calves in 06, any cost you assigned to the calves is carried over to 06 and deducted in the year of the sale to offset the income from them. [/QUOTE]
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