Creative toolcat purchase

[radman1]

I am trying to figure out a creative way to purchase a 3 pt toolcat for next year, but for business purposes, want to apply it to this year taxes. I have a 40' manlift genie that is in very good condition that I bought on an auction a few years ago for 10K. It would only go one direction when I bought it. Took and risk and discovered it was only a minor adjustment of the hydraulics and it worked normally. Updated a few switches, new filters, oil etc. for a few hundred more dollars. Dealer wants my machine (for a rental unit) and I want a toolcat. He offered me 35% discount off of the toolcat list and my lift. A toolcat D ($35,860) with cab ($4195), road pkg($1,760), hi flow($1,240), larger tires ($250), block heater($130), 68" bucket($605) and 7 pin attachment ($175) has a list price of $44,215. 35% off gives savings or $15,475. He has never seen the genie but he trusts me and I have purchased and traded stuff before with him including kubota tractor, 2 skid steers, attachments etc.

No one knows what the price of a 3 pt will be but with rear pto, rear hydraulics and lift arms, my guess it will be 48-50K. This was his initial offer. I am tempted to ask for 10K trade-in and 18-19% off list price. What other ideas do you have?
Second point is that I want to take it off this years taxes for farming. Can he write me a receipt for purchase of toolcat and I deduct it this year if I make substantial down payment this month. For security reasons should be money be put in escrow? (My uncle many years ago paid 15K upfront on a shed to a company who went bankrupt before delivery of building and he was out 15K.) Any other ideas?
Am I crazy for attempting this? I probably would not buy it next year because of tax deduction reasons. Let the suggestions come.

 

[dsb5610]

Radman1,

18-19% off with a 10k trade-in would be almost a break even on both sides. You get most of your money out of the lift and depending on shipping costs the dealer is around cost on the TC. Would be a good deal if you could get it.

I would recommend you consult a tax professional regarding the deduction. I know years ago when I helped out at a large farming operation there was always a flurry of activity right before the end of the year. Monies were paid out before the end of the year but equipment didn't show up sometimes for months.

dsb

 

[odleefs]

Radman,

While I am not a tax accountant or tax attorney, I believe that in order to deduct from taxes this year, you must have the TC in hand and for use before Midnight 12/31/07. But this is just my understanding of our short and simple tax laws!

Steve

 

[radman1]

I did contact my accountant. Ideally the equipment should be in service at the time of deduction. However, it is common for equipment orders and payments to be placed at the end of year with arrival of equipment in a few months. Some equipment is not manufactured/available or deliverable until some payment is paid up front.

 

[GitchiGummi]

So..based on what your accountant said...can you or can you not consider money down from this year on a machine delivered next year?

You said you paid 10K for the broken lift and fixed it? What are they selling for now? Can you depreciate the lift if you sell it for less? If so negotiate the price and sell the lift for less on paper and depreciate it.

If I were you I might be a little leery of the 3pt. Toolcat actually going into production. Can your dealer give you a reassurance that he will be able to get you one. You might not see it for some time which means your $$ will be tied up in escrow or whatever while you wait.

Perhaps he would agree to sell you a D now and take it in on high value for trade when you see the 3 pt. TC on his lot?

35% off the Toolcat list (presumably $50,000) seems to be 15% off list and your $10,000. 15% off is a high standard discount. Not really a super deal for you. Get as much as you can for your lift. AKA fair market price. Use your money toward TC.

Why will the 3pt Toolcat be $50K. Do we know this to be a fact. Did he show you projected pricing? Anybody have good info on this? A new D loaded at full list is $43k now. Is a 3pt hitch substituted for a dump box really $7000 more to produce? I think no. In this case (inflated price) your dealer is getting a steal on your lift.

 

[radman1]

gitchigummi

I think the lift is probably worth more than 10k. My dealer probably knows that as well and probably worth 12-15K but buyers for these things are not easy to come by. At the time I bought it, it was probably worth 20-25K.I have owned it about 3-4 years and it is a 1996 or 97 model. He knows I take good care of my equipment and it is maintained well. It is a 2wd model which is less desireable and is diesel only. The fix was a simple hydraulic adjustment of a screw that determined the rate of speed back or forwards. So simple it was almost laughable. I just rarely use the lift any more but great to change a light bulb! It has been stored in side and works great.
I have talked with a knowledgeable source at bobcat and 2 separate dealers who have also confirmed with bobcat that the 3 pt is coming soon. Deal would be dependant on 3 pt being available or down payment back to me. All of this would be written down. A loaded D is about 44k. Previous pto option cost around $2,600 when bobcat previously offered it. It appears that the dump box will no longer be available and I figure the loss of the dump will be offset by the hydraulic 3pt. Now add the cost of 2-3 rear hydraulics with controls, add another $1,500 more. Add another 1K bobcat "aren't we brilliant fee" and closer to 48K. New model is rumored to have optional hydraulic bobtach for another $1,200. This is all a SWAG. If the 3pt toolcat never comes to market, he will probably get a 10K genie.
You are correct is saying a 50K toolcat minus 35% is about 15% off list and my 10K genie. That is why I am more inclined to go near a 20% off toolcat and any other attachment, and then minus the 10K genie - if he will go for it. This sort of gets him and myself a good deal. I believe that 20% off of list is near his cost. Lower overall price of toolcat and a equipment trade in will lower the over amount of tax paid which benefits me.
I wouldn't ask for a current new D model and later trade it back because I believe it is probably not realistic and a bad deal for him. He has no used toolcats to consider with trade in down the road. With new toolcat purchase I would probably sell my CUT but sell it on my own.
The deduction question is a bit of a sticky issue. As dsb5610 said earlier, with farming and other business it is done. The argument is the equipment cannot be obtained or ordered until the monies are paid up front. I will be paying for a irrigation pivot this month, but company cannot erect it until better weather. In this case the delay is due to outside forces that I cannot control. The payment and invoice for the pivot is this year. I plan to deduct the pivot on this years taxes.

PS. I have made some income off of the genie including myself but also rented it for wiring and constuction of pole barn sheds, painting houses etc. This may be a good chance to unload it. (Also it would be a way of stopping people from asking to borrow it!) It is also a great tool to put up x-mass lights. I hate to start using the ladder again.

 

[GitchiGummi]

See what your lift is selling for elsewhere....

http://www.machinerytrader.com/list...&ETID=1&GUID=1177E6F5435C4DA1BDEBDA615E732B4F

 

[radman1]

See what your lift is selling for elsewhere....

http://www.machinerytrader.com/list...&ETID=1&GUID=1177E6F5435C4DA1BDEBDA615E732B4F

Thanks for the link. I tried looking for something like that. The cheapest ones they had listed where models similar in age to mine but many have 3500-4000 hours. Most are in the 15-20K range with 4wd. Mine is 2wd with about 1850 hours on mine. A little more negogiating ammo on my side. Todays model has had very little changes in the past 10 years.

 

[radman1]

Talked to dealer today. He is willing to give me 20% off list of toolcat and any attachments and he will allow me an additional 10K off for the trade in of the genie. The deal is off if a 3pt toolcat is not available. I think it is a reasonable deal. What do you think?

 

[JDPN]

Talked to dealer today. He is willing to give me 20% off list of toolcat and any attachments and he will allow me an additional 10K off for the trade in of the genie. The deal is off if a 3pt toolcat is not available. I think it is a reasonable deal. What do you think?

Rhetorical question?