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Starving the beast is getting harder

L

LAA

Well-known Member
Looks like the section 179 increase extension is still stalled in the Senate and will not come up in 2014 so buying equipment is not going to keep the tax man at bay this year. I hired some more land cleared and will buy a couple more loads of pipe fencing and invest in some registered Hereford cows, might as well buy purebred stock because commercial cows are just as expensive as registered, maybe get in the bull business, bulls are always in short supply in my area.
Sure hope the new congress ups the section 179 for 2015, I want a new baler before I retire and it sure is nice to get a 40% discount.
 
You can do a lease option. That is probably the best way to get around big purchase depreciation.

I do hope they bring back section 179 to the way it was. It was just the right time, with 6 and 7 dollar corn for me to get my machinery out of the 1960's and into the 1980's and 1990's. Now, I'm only 2 or 3 decades behind, instead of 4 or 5!! Woo hoo!!
 
Are you saying if I buy a piece of equipment I can't depreciate it or write it off any more?
I've been looking for a newer tractor to buy before the end of the year for a write off in the 2014 tax year.
 
No, you can depreciate your tractor under as normal on a yearly basis under MACRS or write off up to $25,000. of the price under section 179 in 2014 if you meet the other income rules and total equipment purchase rules. what I am referring to is that the section 179 limits have defaulted to $25,000 from the recent years highs, section 179 is most useful to individuals in '' wind fall'' years rather than normal income years, unless they have outside income to defer.
 
We just had our annual tax planning session on Wednesday...our CPA is frustrated with the 179 changes as well, but optimistic that it MIGHT get addressed by the current congress in Dec. Very likely changed by the new congress in 2015. Worst thing is not knowing what to plan for when the rules are fickle.
 
I've read in a couple places now that the work has been done, agreements made, etc. and congress will pass it in Dec. HOPEFULLY. I'm hoping against hope that is so, because otherwise, I'm in for the tax event the likes of which I have never seen.
 
I resemble that comment too! ;)

For those not so familiar with farming, this is not any sort of
free tax rebate to farmers.....

We can deduct major purchases over time, perhaps 1/20th of
the cost each year off our taxes for 20 years. So the deduction
is always there.

What the special 179 does is allow one to deduct a much
bigger amount the first year.

Then you have far less deductions following years for that
item.

If we farmers start playing that game, we need to keep doing
so, or we end up a year with good income, and no new or old
deductions to keep us from a higher tax bracket.

We get caught between a rock and the IRS..... When they
change the rules so drastically.

At times the govt feels letting us accelerate these deductions
helps spending and employs more people and more taxes are
generated, so they always up these limits in an election year.

Other than this year..........

Paul
 
Well put, Paul.


The hard part is having to spend an arm + leg on taxes, and then a few months down the road, finding out you are short on money because of input costs, or unexpected expenses. Because with farming, it is always something.
 
Well if it is not to late delay crop sales till after the first of the year the income would be on the next year.
Fuel is at a good low for purchase for the coming year also. Do you need tires for anything or spend on next years seed and fert.
 
paul- to add to your good explanation for the benefit of those not too familiar....in "98 my CPA said I could buy some machine up to $13,000 and write it off with section 179, or pay lots of tax to Uncle Sam. I bought my first good skidloader for $12,900, and wrote it off. Then no ensuing annual depreciation.

Current 179 limit is $25,000, I think. In between years it slowly increased to what, $250,000 a couple of years ago? Now much lower. The inconsistency/uncertainty of tax law is a pain to deal with, with yearly adjustments.
 

I can't imagine making so much I had to worry over deductions or could consider big ticket items. Must really stink... :lol:
 
I am glad to see you know nothing of tax law, thats a nice addition to the myriad of other subjects you know nothing about. Section 179 is part of the tax code, it is not even remotely close to a ''subsidy''. To gain any tax advantage from section 179 you actually have to do some business, you know, spend your own money on what you choose to spend it on instead of pouring it down the black hole of governmental fraud and waste. But I forget, you are one of the crowd who thinks all of the nasty capitalists should forfeit their earnings and profits so that the useless can further proliferate.
 
(quoted from post at 23:40:51 11/28/14) Well if it is not to late delay crop sales till after the first of the year the income would be on the next year.
Fuel is at a good low for purchase for the coming year also. Do you need tires for anything or spend on next years seed and fert.
Click to expand...

Can't do that. IF you harvest the crops in 2014, you have to declare value of the crop, and pay taxes on it. Unless it is under a certain dollar amount. There were a few other exceptions, but, for the most part, if you grow it in 2014, you get taxed on it in 2014.
 
(quoted from post at 07:32:47 11/29/14) Nobody likes it when they lose THEIR subsidies. As for the 2015 Congress passing anything, fugetaboutit.
Click to expand...

section 179 is not specific to farmers... subsidy and being allowed to depreciate equipment faster are 2 completely different things. I've never taken a subsidy, EVER. You can check EWG website to see that. However, if I buy a piece of equipment because I have a windfall year, I'd like the option of being able to take that piece off my taxes in the year I bought it, instead of dragging it out over many years, to the point it is no longer in service, yet still being depreciated. There are some things the IRS should have NO control over. They already have too much control as it is. It's akin to a schoolyard bully shaking my pockets out every day, to make sure I remember who is the boss. Anyone who agrees with these policies is also a bully.
 
Was that too close to home, LAA? Did I offend your delicate sense of entitlement?

One man's tax deduction is another man's subsidy.
 
IRS doesn't write the tax code, John. Our elected representatives do that.

Deduction, subsidy, it's all a matter of semantics. If something decreases the tax you pay or otherwise increases your profit at the government's expense, it's a subsidy plain and simple. Homeowner's interest deduction: subsidy. Earned Income Credit: subsidy. Deduction for depreciation: subsidy. I take all the tax breaks I can get, but I don't pretend I'm somehow different from everyone else who takes a tax break.
 
It is not semantics!!!

If you can deduct a business expense over 7 years, or 50% in the first year, you are still just deducting a business expense. No where, ever, will you find a business expense considered a subsidy.

I do agree that the IRS doesn't write the tax code. However, my opinion of them being bullies doesn't change.

I'm not going to argue with anyone. However, I was offended by what was said. It seemed to be purposely inflammatory. Maybe not directed at me, specifically, but you have to understand how it could be interpreted.
 
MarkB_MI,

Your twisted, unamerican logic does not offend me in the least. I am not surprised to read that you consider paying less tax to be a windfall at the ''governments expense'', it is your kind who do not grasp the concept of private property and freedom who have voted us into the mess we are currently in. John Adams famously said that it was the citizens duty to pay the least amount of tax they legally and morally could, hence ''starve the beast''. Áll of the founding fathers knew that central government should be held as small and powerless as possible. You are welcome to take full advantage of the inclusion on the 1040 that invites you to make a voluntary extra payment to reduce the federal deficit, but I wont hold my breath until you do so.
 
I guess by your thinking, it is "un-American" to believe that the federal government should pay its bills. Where do you think your taxes go? The lion's share of the federal budget goes to Social Security, Medicare/Medicaid and defense. Thanks to sequestration, the first two can't be touched by budget cuts which leaves number three. So when you say you want to "starve the beast", you're really saying you don't want to pay for defense programs. You don't want to replace equipment that's worn out from 13 years of constant combat. You don't want to pay for the care of thousands of veterans maimed in war. Apparently you think the US should fight its wars on credit, then stiff its creditors.
 
Wrong. As long as we have the cash choice, it's the cash that counts. I heard that they're working on taking that away also. There are elections you can take for some things, like CCC loans- as to whether it's income when you get the loan, or when you pay it off.
 
(quoted from post at 22:25:33 11/29/14) IRS doesn't write the tax code, John. Our elected representatives do that.

Deduction, subsidy, it's all a matter of semantics. If something decreases the tax you pay or otherwise increases your profit at the government's expense, it's a subsidy plain and simple. Homeowner's interest deduction: subsidy. Earned Income Credit: subsidy. Deduction for depreciation: subsidy. I take all the tax breaks I can get, but I don't pretend I'm somehow different from everyone else who takes a tax break.
Click to expand...

I would have to disagree with the premise of your argument Mark. Gov't isn't owed anything by the taxpayer, it has no money of it's own. Gov't uses the law to tax people to pay for the programs it has to manage and to pay the interest on borrowed money. From my point of view that means every cent taken from the tax payer is basically extorted money. Pay or go to prison, lose your property. A deduction is s protection from gov't for a taxpayer who is obviously part of the contributing side of the ledger. A subsidy is money taken from other taxpayers and given, by law, to another person who may or may not pay income tax. That's a huge difference IMO. When a low wage earn receives an tax return larger by thousands of dollars than what he contributed in tax, that's a subsidy. When a deduction for charitable giving is given, thats a protection from taxation.

Hope that makes sense.

As for sequestration, lets not pretend that it's a real issue. It's just a political hockey puck. It's a non-issue for the most part by now. The "un-American" issue, IMO, is the criminal way our Congress and WH over the past few decades have put us in debt to the point we stand today. Paying your bills is one thing. Creating entitlement classes so you can get their votes through the threat of cutting their income...that's something else.
 
The federal government should cut spending, end entitlements, such as welfare, medicare/medicade and privatize social security or get out of the pension business altogether. Defense spending is one of the few things actually worth paying for, but yes, ''starve the beast'' and let them prioritize.
 
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