Deduct implements on taxes if you Farm or Use in Business?

[sweettractors]

What is the Tax code criteria for deducting or depreciating tractors and implements if you use them in your full or part time business or farm operation? Ken Sweet

 

[smstonypoint]

Ken,

The IRS publishes Publication 225 (2010), Farmer's Tax Guide.

Chapter 7 will tell you everything you want to know (and then some). I think the whole publication is worth the read, even for those who don't do their own tax preparation.

Steve

 

[sweettractors]

Ken,

The IRS publishes Publication 225 (2010), Farmer's Tax Guide.

Chapter 7 will tell you everything you want to know (and then some). I think the whole publication is worth the read, even for those who don't do their own tax preparation.

Steve

I had a customer that owned and farmed a 300+ acre farm and had bought tractors and implements for years to run the farm and he and his accountant did not ever take any deductions or section 179's for anything. He was in his 70's when he found out he needed to communicate better with the person doing his taxes. Ken Sweet

 

[beppington]

Ugh.

 

[smstonypoint]

He needed to fire that accountant.

Steve

 

[smstonypoint]

He needed to fire that accountant.

Steve

Upon reflection, maybe the accountant was taking into account earnings for Social Security purposes -- higher taxes paid while working (self-employment income and FICA) and higher SS payments after retirement.


Just a thought.

Steve

 

[SandburRanch]

What is the Tax code criteria for deducting or depreciating tractors and implements if you use them in your full or part time business or farm operation? Ken Sweet

--------------------------------------------------------------------------
Our tax system is such a joke with all the - and if - but if - sometimes if - crap that I guarantee if you ask that question to 10 cpa-s don't be surprised if you get 10 different answers.

 

[sweettractors]

--------------------------------------------------------------------------
Our tax system is such a joke with all the - and if - but if - sometimes if - crap that I guarantee if you ask that question to 10 cpa-s don't be surprised if you get 10 different answers.

I had a tax lawyer tell me that if you used a implement or tractor in a situation where you file a schedule F or you have a part time custom Brush Hogging service,Snowblowing service or Custom tractor work of any kind and file a schedule C that these items could be fully depreciated or at least partially depreciated or prorated depending on the percentage of farm or business operations the tool preformed. Obviously, you could not take them off for use in your own yard or home garden, etc. It would have to be commercial "for profit" type of business to qualify. Is that prettty close to correct? Ken Sweet

 

[smstonypoint]

Is that prettty close to correct? Ken Sweet

Yes.

Steve

 

[Alan L.]

If used at least 50% for business you can write off the business portion of the cost up to $250K (going up to $500K) under section 179 IF the business makes a profit. In fact you can add in all business profits and even salary to get the "profit".

I can't imagine a scenario in which paying more income and SE tax to get more SS benefits makes sense unless maybe only a year of credits was needed to qualify.