IRS Depreciation Years on a Tractor

[smfcpacfp]

For a tractor, the MACRS straight line life is 7 years and the ADS straight line is 10 years both half year convention which means you take depreciation in 8 or 11 tax years.

You can't use section 179 for rental property as you thought.

Your philosophy on business expenses though is way off the mark and will only get you in trouble much of the time. The IRS isn't in the habit of paying part of the cost of personal expenses. I have been involved in a number of cases where questionable expenses, those not making GOOD sense, were disallowed creating financial problems for the miscreant taxpayer, but I always say if you are willing to take the chance be willing to accept the consequence -

Business purchases don't have to make GOOD sense, you just have to buy STUFF, use it for income producing and have a receipt of purchase and some way relate it's use for the business.

 

[JOHNTHOMAS]

For a tractor, the MACRS straight line life is 7 years and the ADS straight line is 10 years both half year convention which means you take depreciation in 8 or 11 tax years.
Please provide the tax schedule your quoting with this info for my documentation. Thanks. I've looked and looked and can't find anything other than obscure implications for the 5 and then possibly 7 years. I'm taking 5 if I can't find a hard numbered clear schedule that says a tractor is a certain absolute number of years. So far what I've found looks like interpretations and my interpretation to this point is 5.

You can't use section 179 for rental property as you thought.

Your philosophy on business expenses though is way off the mark and will only get you in trouble much of the time. The IRS isn't in the habit of paying part of the cost of personal expenses. I have been involved in a number of cases where questionable expenses, those not making GOOD sense, were disallowed creating financial problems for the miscreant taxpayer, but I always say if you are willing to take the chance be willing to accept the consequence - me to. I always went after the miscreant taxpayer. A disallowance becomes the burden of the Auditor to prove it doesn't make good sense, not just a judgement call. Maybe your experience was different on your side of the table and you dealt with bad auditors.

Business purchases don't have to make GOOD sense, you just have to buy STUFF, use it for income producing and have a receipt of purchase and some way relate it's use for the business.

This may have implied I don't use the tractor at the income producing property and that the tractor is for personal use which isn't so. I have a BX2660, MMM, FEL at home for my personal use. I have seen lots of purchases that were claimed as business purchases that didn't make good sense to me but the burden of proof became the auditors if they disallowed it.
Being a former Government auditor I understand personal expenses are not allowed. A tractor bought and used at a business location exclusively for that income producing property is not personal use. Some may say it isn't used much but the Auditor that disapproves the allowance had better have solid justification to disallow it. When I was an Auditor, we had to be perfect and document any decisions with fact or law not just personal opinion that the business expense does nothing for the business. I have repaired septic systems, moved stuff and leveled land to prove otherwise. I also have the tractor parked in one of my storage units on the property. It's not used alot but it is used for business only.

 

[brin]

Johnthomas, I agree with all you posted. I too have rental property and have used my tractors for more things on the rental properties than I can even post here...I double dare an auditor to prove otherwise..It is a ligetimate business expense in my view. The cost of hiring the tractor and loader work over the long haul compared to the cost of a new tractor with fel and depreciation over the long haul would prove me right. I'm just saying...my opinion.

 

[two_bit_score]

Me and Turbo Tax are my tax preparers. I was a state auditor in a past life and used to prepare taxes for people but it's a time consuming business which I stopped doing years ago. I have property rentals all at one 3+ acre location where my F2680 and B3200 (newly purchased in 2009 with receipt of purchase price in hand from Barlows) are located. Business purchases don't have to make GOOD sense, you just have to buy STUFF, use it for income producing and have a receipt of purchase and some way relate it's use for the business. I'll double check but I don't think I can do the 179 for property rental income, I believe it has to come from earned business income which is different than rental income. The number of years for straight line depreciation is what I'm hunting for. There is a schedule which lists hundreds of items published by the IRS which lists lifes of individual "stuff" used in business. I'm guessing 5 or 7 but I can't find "tractor" specifically listed. I was hunting for someone else using a tractor for business to see how many years they use for the depreciation deduction. I should have been more clear in my original post but I figured there were a bunch of tractor users for business that would pop out the instant 5 or 7 years number. I appreciate the responses that were submitted.

Rental and royalty property businesses are specifically EXCLUDED in sect 179.
That SUCKS. Almost anything else qualifies and (OF COURSE, check with your CPA) you can charge the depreciation off against earned income from a wages job if the depreciation amount exceeds the business income. At least according to the IRS publication I read.

 

[crk133]

i have 7yrs that is from my accountant...he is a smart guy

 

[rdsaustintx]

I double dare an auditor to prove otherwise.

Good luck with that. Auditors don't prove anything, they make lists of things YOU have to prove.

Not sayin how I know, just sayin...

 

[JOELENAHAN]

7 years MACRS depreciation is what the IRS declares for a tractor. It is true you can't claim Sect 179 for a rental property asset. Make sure that you allocate any personal use, if any, when figuring the depreciatble basis of the tractor. In my area, the IRS seems to be conducting more audits on depreciatable property and rental properties. Don't know if it is a target of the IRS, but it seems to be more common. I think they think it is easier to pressure the small guy rather than the big guy's with tax attorney's.

 

[JOHNTHOMAS]

7 years MACRS depreciation is what the IRS declares for a tractor. It is true you can't claim Sect 179 for a rental property asset. Make sure that you allocate any personal use, if any, when figuring the depreciatble basis of the tractor. In my area, the IRS seems to be conducting more audits on depreciatable property and rental properties. Don't know if it is a target of the IRS, but it seems to be more common. I think they think it is easier to pressure the small guy rather than the big guy's with tax attorney's.

Where did you find this? What IRS Schedule?

 

[Orchard Ex]

It depends on your business class/use of the asset. 5 years is for construction equipment, 7 years for agricultural equipment (MACRS GDS).
Scroll down to table B-1and B-2 for class life and recovery periods.
Publication 946 (2008), How To Depreciate Property

 

[JOHNTHOMAS]

It depends on your business class/use of the asset. 5 years is for construction equipment, 7 years for agricultural equipment (MACRS GDS).
Scroll down to table B-1and B-2 for class life and recovery periods.
Publication 946 (2008), How To Depreciate Property

Thanks for information and documentation. Still not clearly defined (IRS standard of operation) for my uses but looks like 5 MACRS 6 ADS to me for my purposes. Mine is closer to construction than it is to agricultural.