JUST DID.............
We are/have a bona fide farm business and registered business name. When we buy a tractor or implement we pay no tax on it, however, an exemption certificate is provided by us to the seller/dealer.
And yes, we depreciate all the equipment.
...and yes, the IRS is very particular about what you deduct as are the respective states.
...consequently, we have a CPA that takes care of our taxes. Part of doing business.
Just because you own 10 acres don't make you a farm. I actually own less than 10 acres but we derive part of our income (actually a large part) from ag related activities, consequently, we fall under the definition of farming for profit.
The key to the equation is, if you will, do you derive part of your income from an agricultrial related activity? If the answer is yes (and you can prove it with tangible recepits and payment for services rendered or crop sales), then you qualify to be ag exempt from state sales and Federal Excise tax, but be ready to prove it.
My final comment is, if you have any doubt as to the validity of your proposal, don't do it. The IRS and state revenue departments frown upon non agricultrial activities being claimed as ag related. Owning 10 acres and mowing 6 with an acre garden and house on the remaining acre with an in ground pool, is not a bonafide ag operation. Never will be.
You claim an ag exemption under that pretense and you'll get burned, bad.
