Tax Mistake

[GSS]

Alfalfa was growing on our place before we bought it, so it grows on my place, but *I* don't grow it. A true farmer does pay me to come and cut and bail it though, so that works out nicely. Keeps the fields clean too... Maybe some day I'll do it instead.

- Gerald

 

[Tom_Trees]

<font color=blue> People got to griping (rightfully so) that sales tax was paid on that car when it was sold new.</font color=blue>

Interesting.

Indiana collects sales tax on all auto sales. Either the dealer collects it, or the BMV collects it as part of the title transfer. I don't know if it still holds, but 20 years ago it was considered a sale if the name on the title changed -- like a woman getting married or divorced. My ex got hit on this both times.

Tom

 

[buppy69]

In NC if no money changes hands you don't have to pay the tax. For instance, you got the car as a result of a divorce settlement.

Eugene

 

[bmac]

Macher,
My understanding of the tax issues are exactly as you described them. As I am not a tax expert, I am not going to debate strongly one way or the other. All I know is that the accountant I use for my business stated that the state department of revenue periodically audits for interstate purchases where no sales tax has been paid. They will collect this tax. They have a form that businesses are supposed to fill out and submit for these purchases, along with the requisite sales tax. I'm not sure if this applies to personal items.

With regard to BigDave's reply, I do remember something about sales tax and the internet. I'm wondering if this legislation is addressing something different.

 

[Mackinaw]

I paid no tax on my BX...I plan on clearing the land and planting some corn. Unless of course, someone wants to pay me not to....

 

[Phred]

Guys,

You need to be carefull about claiming a farm revenue and therefore getting a tax break.

The IRS has a bunch of rules about this including material participation (you worked enough hours on the farm), posibillity of actually making some money some day, you support yourself or at least try to with the revenue, etc...

I think one guy with 2 acers and a 20 hp tractor will have a tough time convincing them that its a real farm. Your going to put up hay on two acers, and make money at it?

The penalty is that they declare your farm a "hobby" and you get no tax breaks. And its retroactive... i.e. you owe back taxes.

I am no expert on this but if you think your going to fill out a schedule F to save $500 in tax please go talk to a CPA.
That could be an expensive $500 down the road if the IRS thinks you are playing games.

In arkansas if you have a real farm then no state tax at all on any equipment. You just pay for the equipment and sign a waiver saying that you are using it on your farm and away you go. However, I bet that the state checks this stuff and if you are mowing lawns /fields as a business and try to take a ag exception, they will come get you.


Fred

 

[cstocks]

Phred,

Do you know if growing timber (pine) would fall under the definition of a real farm in Ark?

 

[buppy69]

There again, the IRS has nothing to do with state sales tax. When I bought my tractor the dealer told me I had to sell one tomato. He didn't say I had to make money.

Eugene

 

[Gary_in_Indiana]

Same deal here, Buppy. Only the cash is taxed. Next door in OH it doesn't matter. Tax is collected either on the purchase price or on the price of the purchased item BEFORE the deduction of any trade-in.

 

[tdenny]

The other way they often find out is through your warranty registration.