On the right track

rickyb01 · Aug 22, 2017

I would like to purchase a Kubota SVL machine to clean up 150 acres me and my siblings own. I also thought by owning this machine I could possible do some work for other people and write this off my taxes.Year's ago my family ran cattle on this property. The fences are all down and all of the hay meadows are grown up in pines. I basically would like write off a new 3/4 ton truck, trailer and a Kubota SVL95 with a cutter attachment. My question and one that some of you may be able to answer. It looks like I can create an LLC and deduct this from my taxes. The IRS also says I have to be profitable three out of five years. I hope I am able to be profitable but I will still work my full time job and only have one day a week to work clearing off property. So if I create a LLC and lets say after two years I have not shown a profit do I still get to keep the tax benefit the business gave me for the two years I didn't show the profit. Sorry but trying to figure this all out.

Firemanbuck82 · Aug 22, 2017

What does your tax guy say?

Say you work for $500 per day on that one day a week and you work 26 days (half of the days per year). That's $13,000. New truck, trailer and tractor are going to run you about $75k plus interest (3.5%) is $77,600 for a 60 month term is $1,293 payment per month. Multiply that by 12 months is $15,500 per year worth of payments.

So you need to work 31 days per year at $500 per day to break even.

Does that sound doable to you? How will the jobs come in, word of mouth or are you going to advertise?

rickyb01 · Aug 22, 2017

That is a really good point and one I have looked at also. I have no idea where the jobs will come from and I understand where you are going. We both know there is no way for me to know If I will make up the difference. I just want to know If I can keep the deprecations and tax write offs or do I have to pay them back. One thing I need to add is that I have to deal with Alternative Minimum Tax so the only way I can get my taxes lower is to have my taxable gross income lowered.

I want the machine and the truck and the trailer and If I can get them cheaper doing it this way I see no reason in not trying.

Steppenwolfe · Aug 22, 2017

rickyb01 said:
That is a really good point and one I have looked at also. I have no idea where the jobs will come from and I understand where you are going. We both know there is no way for me to know If I will make up the difference. I just want to know If I can keep the deprecations and tax write offs or do I have to pay them back. One thing I need to add is that I have to deal with Alternative Minimum Tax so the only way I can get my taxes lower is to have my taxable gross income lowered.

I want the machine and the truck and the trailer and If I can get them cheaper doing it this way I see no reason in not trying.

The IRS are not dummies, they know how the game works. It sounds like you are buying for personal use, then trying to write it off as "business"... Very dangerous game. I have a " real business" and would never attempt to write off one of my tractors that are all for personal use. You do not want to get on their radar. Be smart, consult a tax professional, it will be the cheapest money you will spend.

rickyb01 · Aug 22, 2017

I defiantly will be consulting a tax advisor and you are correct I think there is a very fine line between it being a business or a hobby. I would love to make a profit out of it but I have no way of knowing if that will happen. If it doesn't I will not go bankrupt and I will continue to pay for the items. Of course If I can make even a dollar profit out of it than it is all legit and it takes my taxable income down.

Steppenwolfe · Aug 23, 2017

rickyb01 said:
I defiantly will be consulting a tax advisor and you are correct I think there is a very fine line between it being a business or a hobby. I would love to make a profit out of it but I have no way of knowing if that will happen. If it doesn't I will not go bankrupt and I will continue to pay for the items. Of course If I can make even a dollar profit out of it than it is all legit and it takes my taxable income down.

Sounds like you are smart enough to make it happen... Good luck