Buying new tractor and and dealing with sales tax

[MossRoad]

Here in Indiana I had to sign an exemption / waiver to knock the sales tax off. But since I was actually building a 35 acre tree farm as a business - I was alright with the accountants and tax guys to go with the Ag exemption (and was not considered a Hobby Farmer). Now I am depreciating the cost of all the equipment against the farm revenue too - further reducing my total cost of ownership.

Another watchout.......if you get caught not actually being a farmer, you not only will get hit with the taxes and penalties, but you may also be at risk of criminal charges for knowingly filing false documentation once you sign the Ag forms (fraud).

Do you have an Indiana farm #. If you don't, you should. There are all kinds of programs, exemptions, tax breaks, etc... that you can take advantage of if you have that number.

 

[unreconstructed]

If the sales tax is that important to you, get a CPA to get you an answer. Sometimes, but not always, the state comptroller's agents will give you an answer that is partial to the interest of the State. The CPA works for you, not the State government.

State sales taxes can be an area of practice all to its own. It is very complex in Texas. If you call a CPA, ask him/her if he practices in the sales tax area. If he/she does, that means he/she probably can give you a quick cheap answer and won't have to spend a lot of time looking up the answer.


State law does not necessarily conform to the Internal Revenue Code of the U.S. Sometimes it piggybacks the fed code, sometimes it does not.

Do not take tax advice from the "coffee shop". This includes TBN. Statutues and the accompanying regulations are a maze.

 

[SnowRidge]

But since I was actually building a 35 acre tree farm as a business - I was alright with the accountants and tax guys to go with the Ag exemption (and was not considered a Hobby Farmer). Now I am depreciating the cost of all the equipment against the farm revenue too - further reducing my total cost of ownership.

Just curious. What kind of trees, and how are you depreciating against farm revenue? Are you trees mature enough to sell, or are you actually depreciating against other farm revenue or another source of income?

 

[RedRiver]

Yep, a lot of salesmen try to convince you that you are indeed a farmer so they can sell you a tractor cheaper than the honest dealer down the road.