Selling a Tractor

Jiles · May 7, 2018

I had a friend ask me the best way to sell his tractor and avoid paying taxes on the sale?
He is retired and on disability and needs to sell to pay bills.
I told him it would probably be ok to go to the buyers bank and get cash handed to him by the buyer.
He needs about 9K.
Any other suggestions?

paul · May 7, 2018

That's kinda a tough deal to ask on a public forum.

We all like to avoid taxes, but when it's someone else, if they are avoiding taxes it means it will cost me more taxes to make up what he is
'saving'.

The taxes would be the recaptured salvage value, after it is depreciated fully, and now would recapture the sales price and pay the taxes back
on the money he deducted earlier.

Probably not amount to much in his situation.

Paul

Andy Martin · May 7, 2018

Number One, if his intent is to defraud the IRS it is best to not ask how to do that on a public forum.

Number Two, if you have used your tractor as a business asset you will owe taxes on the difference between the sale price and the depreciated book value. If however, the tractor has not been depreciated on your taxes (and you saved taxes by depreciating) you only owe taxes on the profit made from the purchase and all costs associated with repairing it and improving it and likely there will be no profit, unless you are in the business of buying and reselling tractors, in that case refer to number one, above.

tomturkey · May 7, 2018

How disgusting is that, trying to avoid paying taxes. lol lol I'm sure whenever one of the bloggers here takes a load of scrap to the recycler he runs right home and writes the amount down so they can put it on their ten forty at the end of the year. gobble

Jiles · May 7, 2018

I understand and don't agree with him but he did not depreciate the tractor.
I was reluctant to post this question, but he is a long time friend and I decided I would try to help him.
I suggested that he talk to his tax man and he said he fills out his own taxes.
I also told him, If I was him, I would just ask a little more to cover his sales tax.

Spook · May 7, 2018

I wouldn?t worry about it. Low income situation, he won?t be paying much anyway, at the end of the year.

Traditional Farmer · May 7, 2018

If he's like most people selling an antique tractor he has more in it than he'll get out of it anyway.

Russ from MN · May 7, 2018

If he's that broke he probably won't pay any taxes anyhow!

tractorguy2 · May 7, 2018

Selling it privately with cash payment about the only way.

Any time I wanted to sell something. I put an ad in the
newspaper and on the bulletin boards around town. It always
worked for me.

What kind of tractor is it? Selling an 8n will be a lot
different than selling a 4850.

Ken Macfarlane · May 7, 2018

If he didn?t depreciate it, and he?s selling for less than the
purchase price plus costs he incurred to make it ready for use,
he likely has a terminal loss on the sale which will reduce his
taxes.

SodBuster87 · May 7, 2018

As tractors do not have a title etc. the way that cars do. Get paid in cash and put it under his mattress. No one will know the difference. Just so long as he doesnt spend large sums in one place it will fall through the cracks pretty quick. Honestly I don't know if I'd accept a check for $9k tax man or not. If I did I would hold item til I went to the bank that issued check and cashed.
Sod Buster

steve706 · May 7, 2018

Sell it for cash and be done with it. The IRS are not monitoring this forum, paranoia over questions like this is ridiculous. Your friend could be
anyone, anywhere in the world and the gov?t isn?t going to show up and take you to GITMO over a trivial question.

Steve@Advance · May 7, 2018

As long as the transaction is under $10K, last I checked, nothing is reported to IRS by the bank.

BarnyardEngineering · May 7, 2018

Yeah, I can't imagine there'd be much tax if any involved. The tractor didn't APPRECIATE in value, did it? He should be able to report it as a capital loss.

Some people are not comfortable with large amounts of cash around.

paul · May 7, 2018

I'm not aware of sales tax being charged on a second hand Ag tractor. I guess the legal key here would be to sell it to a farmer for farming use,
and good to go?

Some states are getting greedy at consignment auction sales and items 'not used for Ag purposes' but on private sales?

Not familiar with a sales tax being imposed on unregistered vehicles, so if he didn't depreciate it, I don't see where tax would ever enter into
this. Don't know every state tho, some have a lot of tax rules.

Paul

moresmoke · May 7, 2018

Assuming he has owned the tractor for at least a year, and is low income IE 10-15% tax bracket, he would not owe any tax on the sale regardless. The sale would be a capital gain and he is likely in the 0% gain
bracket.

I had this happen about 10 years ago. I had very little earned income for a year, but had sold a whole bunch of equipment that had been given to me. It all qualified as capital gain, but my rate was 0%, no
taxes due.

Crazy Horse · May 7, 2018

Well Jiles, being the nice fella that you are and considering your buddy's retired and hasn't much money, I think you should
sell it for him and pay the taxes. That way everyone's happy, including the government.

Selling a Tractor

Jiles

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paul

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Andy Martin

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tomturkey

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Jiles

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Spook

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Traditional Farmer

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Russ from MN

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tractorguy2

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Ken Macfarlane

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SodBuster87

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steve706

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Steve@Advance

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BarnyardEngineering

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paul

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moresmoke

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Crazy Horse

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