Equipment Needed for 80 Acres

[patrick_g]

I'm sorry to say - I am confused by this IRS stuff and buying things that the IRS wants to tax you on. What kind of tax are you talking about and what are they auditing you for? In my state there is sales tax and some things are subject to tax with a farm number and others are not -- a bushhog is not considered non-taxable for instance.

What if I buy and sell equipment? Is it taxable then( I claim the gain but don't pay sales tax)? We primarily have a timber farm but have been producing some hay for the last few years. I just want to avoid scrutiny - I'm not depreciating the equipment but I do expense some of my cost associated with travel etc against my eqmt gains.

Thanks

RVAITOR, I hope I didn't confuse you too much. There are two separate ways to get in trouble that I mentioned (and a lot that I didn't.) IRS can smell a hobby farm from miles away up wind in a rainstorm. Wishful thinking or lame claims of what you thought was OK don't impress them.

A "farm tax number" to avoid paying sales tax on certain items used in agriculture is a heavily abused thing. Folks get carried away and abuse it. Why? Because they can. It gets treated like a discount that is owed you because you are you and certainly special and not subject to the laws of man like mere mortals. If you keep it up long enough you may be in for a nasty surprise. Most farm stores know what can and can not be bought tax free. Because the item qualifies to be on the list and can be sold tax free to the holder of a tax number does not make that particular use a legal act. the stuff you buy must qualify and YOUR USE of that stuff must qualify.

An example: You buy a gal of 10% Permethrin for $50 and don't pay the tax. (You save $4-$5) if you put the chemical in a cattle rub for cattle that are in agricultural productioin not pets on a hobbyu farm then OK fine. If you use it to spray your inlaws house for bugs you are in a technical violation. This is one of those fine areas that isn't monitored too closely. I buy Permethrin by the gal and some of it is sprayed on clothing to tick proof it. The clothes are then worn in agricultural activities intended to make a profit. All is fine. Then I wear the clothes on a picnic to avoid chiggers and it is a technical violation as the use of the tax free goods (Permethrin) is not in agricultural production.Other examples of egregious abuse can be sited. Off road diesel with no road tax and no sales tax (thanks to tax number) ends up in lots of on-road trucks. Every so often someone is crucified in public then drawn and quartered as an example. This is a federal tax violation as well as a state sales tax violatioin. Remember what Al Capone went to jail for? TAX EVASION!

I doubt anyone is going to jail for a minor transgression but if the records show a pattern of abuse you are asking for trouble. Stores like TSC send you a printout at the end of the year detailing all your taxed and not taxed purchases. I personally would not bet that a tax investigator couldn't access those records electronically or even "mine" the records for likely abuses.

Pat

 

[OrangeGuy]

So I'm hearing...small TLB like a Kubota L48, compact track loader (skidsteer with rubber tracks), used HD TLB like Ford 3-4-5 Series, AC Dozer, self propelled articulating boom, power track and watch the tax situation.

Soundguy-I've been reading the "equipment trader" magazine. It looks like a person could get a decent TLB for $20-$25K and/or a dozer (Cat D3 size) for about he same price.

Z-Michigan-I like your recommendation on a compact track loader. This could be both my Bobcat and dozer. Saturday, I'm going to meet with my local Bobcat dealer and check out a Bobcat T300. One of the reasons I liked a dozer was no flat tires. A compact track loader could solve that problem. Perhaps a Bobcat compact track loader and a used mini excavator.

BarryinMn-A self propelled articulated boom sounds like fun, but I'd have to win the lottery to add one of them to my machinery list.

Riptides-I hear your about the restoration costs of an old barn. However, a former Minnesota dairy farm just doesn't look right without one.

Again, thanks for your replies.

OrangeGuy

 

[Z-Michigan]

Z-Michigan-I like your recommendation on a compact track loader. This could be both my Bobcat and dozer. Saturday, I'm going to meet with my local Bobcat dealer and check out a Bobcat T300. One of the reasons I liked a dozer was no flat tires. A compact track loader could solve that problem. Perhaps a Bobcat compact track loader and a used mini excavator.

The T300 is a pretty heavy duty machine. I think it would work well as both loader and small dozer. I would love to have one! Also, there are a couple of backhoes that will fit on the front of a skidsteer or compact trackloader; Bobcat makes at least two (A basic and a deluxe version). If you get something like a T300 you may be able to add a backhoe and have one machine that will do everything.

I don't have personal experience running track loaders or skid steers, but I understand that sales of rubber-tracked loaders are way up with a corresponding decrease in wheel skidsteer sales, despite the higher price of the track loaders. The tracks give you much more traction, a smoother ride, no flats, and a lot less ground pressure.

 

[patrick_g]

It may be true to a certain degree with much of the used equipment but in my limited experience it is certainly true with dozers that everyone wants a used one to do a limited number of projects and then resell it.

It is like playing musical chairs. Lots of fun if you aren't the one left standing without a chair when the music stops. Guy A buys used and then sells to B who uses and sells to C and so forth with not everyone in the group really doing good preventative maintenance (or knowing how or worrying about it since they will sell soon) Everyone is able to sell for about what they paid and feels good and smart about the great clever decisions they made, except the guy (selected at random by chance with no reflection on his treatment of the machine) who just happens to own it when something(s) of great value breaks or requires replacement due to wear. That is a sad day for him. Dozers that don't run or need lots of parts and labor to get going or working well again often would require repair bills exceeding what you can get yet another (pay your money and take your chances) dozer for.

Most folks like to think they can pick good machines but dozers are not really simple. I strongly recommend getting help from someone NOT MONETARILY connected with the deal and very experienced with dozers.

The previous owner of my property was in the LARGE dozer business for decades and helped a friend of his and mine get a good used dozer. Still it needed a turbo just a few years later with not many more hours on it. Even the best experts can't predict the mean time to failure of used equipment with any degree of confidence. What you know for sure is that eventually something expensive will break or need to be replaced, you just don't know if it will be in a month, a year, or 10 years. What can be said for dozers is that there is no such thing as inexpensive repairs.

I'm not trying to rain on anyone's parade but if you really don't just have to have a dozer and can make do good enough with other equipment that has good utility for other types of jobs then NOT getting a dozer can be a smart decision.

Pat

 

[BarryinMN]

Hmmmm.

I've had a dozer since '02 & is my only pick for doing heavy work on sidehills & sideslopes.

I have driven CTL's but not sideslope doing work. They seem more stable than a wheeled SS, but no dozer.

CTL track R&R is a significant expense. The one maintenance difference I see is a dozer is relatively open to work on, a SS is crammed.

 

[patrick_g]

Barry, I'm not knocking dozers. When they are the right tool they are the right tool. Buying used is a bit more of a risk for the average guy for the reasons I cited previously and other reasons as well but still very desirable for many tasks.

Pat