tax question

[redrider91]

i know that tax time is a ways away, but i have a question that unless you are self employed or a tax guy more than likely wont know what is going on.

i am a farmer and self employed. i am thinking about getting a new truck, but with the deduction from that and all my other deductions i will have more deductions than income. so my question is what happens. do i get a credit for next year or does it go in a black hole or what?

[derekhonda]

I'm not a tax expert, but any big purchase like that for business use will be put on a depreciation schedule.

So, if it is a $40,000 truck, you don't write off $40,000 in year one, you will probably write off 8k for 5 years or something of the like.

[redrider91]

i know that you can depreciate it over 5 years, but im going to salary next year so im gonna completely expense it this year. once im on salary it wont count as a deduction.

[derekhonda]

You are all sorts of mixed up or else are just not explaining it right. You need to go see an accountant, as there will be tax advantages to doing it a specific way.

[derekhonda]

Ok I read that again. Is this your plan?

"For the tax year of 2010, I am going to purchase a truck under my self employed company. I made $40,000 this year at the company, the truck is going to cost $40,000, I am going to completely expense the truck for the 2010 tax year, thus negating any profits to be taxed. Then, I am going to be salaried through another farmer, and essentially close the doors on my own company, and walk away with a truck that is paid off."

Because that ain't gonna fly with the government. And no, you cannot set your depreciation schedule willy nilly, there are charts to follow that the irs sets, and they have, on occasion let you expense things 100% in one year, but they are not going to let a little business do it for the exact plan you are trying to put together.

When a company makes money, the government wants their taxes. If you go and buy that truck and expense is 100%, the government doesnt get any tax money, you could physically shut the doors of the company, and walk away with a "free" truck. There is definately something illegal, I'm just not sure exactly what it is. SEE AN ACCOUNTANT.