O/T business/ accountant question

Jake Collie · Apr 23, 2013

I have owned some land for the last ten years that I have let the neighbor farm for free. It needs to be plowed this year after many years of being hay so I told him I was going to farm it myself from now on. I will be putting in corn and expect to make around $3000 this fall when I sell it. I would like to write off my expenses so I can lessen my income but I don't currently have a farm business. Over the years I have amassed a few tractors and some equipment that I wouldn't mind writing off either. If I start a business can I write off what I paid for the tractors and equipment or do I first need to sell them to my business from myself to be able to write them off? If I do need to sell them to my business do I have to claim the money I sell them for as income on my personal taxes? If I do have to claim the income it really doesn't pay to do anything.

frrankmn · Apr 23, 2013

Did you get the tractors and equipment for free? Why would it be income if you sell them for what you have in them? Did you already depreciate them out?

Whichester1 · Apr 23, 2013

Suggest you talk to a CPA. It will save you money and headaches in the long run.

Frank 41 · Apr 23, 2013

Go to irs forms and get the schedule F form. This will give you the categories of income and expenses items. I do not have separate business entities, just separate pages for everything involved. My accountant does all the deperciation. If you plan to deperciate your machinery, you use your actual cost. You can deperciate tile, buildings, machinery, and other items used in your operation. The only thing that will bite is when you sell these items. All the value will be deperciated out and the sale price will be all capital gain.

Jake Collie · Apr 23, 2013

I did pay for the tractors and equipment. I just assumed that if I received money for them that would be considered income. Thanks for all the replies. I will be seeing an accountant.

MarkB_MI · Apr 23, 2013

You can claim depreciation on your equipment, beginning with the year you put the equipment in service. Which is of course this year. Check out IRS publication 946 as well as the instructions for 1040 schedule F.

JMS/.MN · Apr 23, 2013

I disagree about sale of depreciated assets being capital gains. It would be taxed as ordinary income, which is higher than capital gains.

Mike (WA) · Apr 24, 2013

Actually, a combination of the two. Recapture of depreciation is ordinary income, any profit over and above the original purchase price is capital gain, provided you've owned it for more than a year.

Rick Kr · Apr 24, 2013

For what you are starting this year, I think a Schedule F would be enough. That is how I started 8 years ago.

Now I have a tax accountant handle everything, definitely worth the time for me to have a pro handle it.
Rick

O/T business/ accountant question

Jake Collie

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frrankmn

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Whichester1

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Frank 41

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Jake Collie

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MarkB_MI

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JMS/.MN

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Mike (WA)

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Rick Kr

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