>But eventually, you have to pay for that last >combine! I've always assumed when people talk about buying equipment for one/two/three seasons and trading it... They were doing it as a lease. First, that's 100% tax deductible as a business expense. I don't know about farm-specific provisions, but in general industry you'd have to put it on a depreciation schedule if you owned it...and your deductions due to depreciation isn't necessarily what your payments are. Second, if it is a lease...you never build up equity, but you never have to buy a machine in the end either. I can see how both business models work. ----- -----
On a side-note... At my fire company we buy our apparatus -- Town every five years or so will issue a bond to cover a fire truck along with a bunch of other items for fire/highway/schools/etc that add up to a little more than $1 million. Fire Company chips in 10-20% of the cost from our BBQ fundraising and such. But we lease our ambulances. The way the State regulations are for ambulance billing, we can't "save" enough to buy a new ambulance every 4 years. That "savings" would be "excess profits" and we risk having our rate cut. By leasing, it's expense and doesn't risk our billing rate. Financially, if you took the long term view, saving up would be cheaper. But the regulations don't allow / make it very risky to do. Interesting the can of worms that financing & rules can open up!
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