Tax on Tractor?
- Thread starter Rob-D
- Start date
- Views: 6370
BillyP
Veteran Member
I don't have a clue but I'd sure ask my CPA?
I didn't pay any sales tax on my new JD since I signed a waiver that it's primary use was for an agriculture based business/farm. Which is true by the way..........I'm building and running a Xmas tree farm..
Also, my CPA is depreciating the cost of the tractor over 7 years (I think). This helps to offset the cost against revenues generated on the farm.
Also, my CPA is depreciating the cost of the tractor over 7 years (I think). This helps to offset the cost against revenues generated on the farm.
JOELENAHAN
Bronze Member
Yes, It can be used as an itemized deduction on your Federal taxes. You have the choice of taking the general sales tax deduction or the deduction for state and local income taxes paid.
OP
Rob-D
Veteran Member
Thanks Joel,
I spoke with the big guy and they told me IF your specific state classifies a tractor as a motor vehicle you can take the deduction. I have an inquiry into my state (Never York) asking them their position.
Hey, it's a recreational vehicle to me!
I spoke with the big guy and they told me IF your specific state classifies a tractor as a motor vehicle you can take the deduction. I have an inquiry into my state (Never York) asking them their position.
Hey, it's a recreational vehicle to me!
George2615
Super Member
My CPA says if you have agricultural status or use it for business you can deduct sales tax on it. I think there is a requirement on a certain number of acres (40 acres or more) around my area to have AG status.
RalphVa
Super Member
- Joined
- Dec 19, 2003
- Messages
- 7,885
- Location
- Charlottesville, VA, USA
- Tractor
- JD 2025R, previously Gravely 5650 & JD 4010 & JD 1025R
You can either deduct your sales tax, including large purchases like car or tractor taken in excess of the normal amount they allow, OR state income tax. I tried it on my tractor for my 2004 return, but the state income tax was a bigger deduction.
Ralph
Ralph
savageayape
Bronze Member
Champy,Champy said:
I own a small business in Indiana. I don't understand how you can avoid paying taxes on a piece of equipment just because it's purchased for use in your business. Don't get me wrong, I'm not claiming to be a tax expert. I just know that I have to pay sales tax on every piece of equipment I purchase and use in my business. When I purchase equipment from out of state, I still have to pay Indiana sales tax on it. They would fine me and possibly worse if I did not pay the tax. Is a tractor or vehical treated different with regard to sales tax when purchased for business use only? Now, I do NOT pay sales tax on an item I purchase which I will be re-selling through my business, but I must pay sales tax on equipment or any other item I purchase for business use, however, my accountant will depreciate all equipment as allowed... Again, I'm not saying you're wrong, I just don't understand what you are doing.
savageayape said:
I really don't have (or know) the exact IRS specifics, but between my CPA and the John Deere dealer, it was pretty much a simple transaction. Here is how it was explained (and transacted): "Is the purchase of your tractor for PERSONAL, COMMERCIAL, or AGRICULTURAL use?" If used for Ag, then sign this exemption form from the Dealer, and no sales tax is charged - or owed.
If this was strictly for a commercial business or personal/residential use, then there is no exemption....it is centered on agricultural purchases only. I have an aggricultural based "business" - hence the exemption is granted. My CPA cannot approve this approach if I am not actively running a farm / nursery / etc...with the intent of generating a profit. And therefore filing all the appropriate tax forms (like Sched F), and also meeting all the Federal requirements for ag businesses / farms.
Hope this clarifies (the little I know on this subject).
