Posted 1/11/2019 11:52 (#7237441 - in reply to #7233916) Subject: RE: Equipment sale tax implications?
Oskaloosa, Iowa 52577
With respect to the tile plow etc bot in 2018 and paid for...……..the ONLY way to not start depreciation in 2018 is to prove that the plow etc was NOT available for service.
The would mean, for example, that the engine was blown or had to be replaced before it could be used, and you did not get around to it during 2018...…….ie some event that would prevent use.
THEN, there would have to be a follow-up event in 2019 that would show that the machine(s) were enabled so they were then put in service.
Barring being able to show a deferred capacity to work--------- slowing the depreciation is you only bet. One of those ways would be the election of straight line method...……..BUT, that would saddle you with that slower expensing for the life of the equipment...…. so that is really something you want to think long and hard about.
With respect to the semi tractor-------- your tax person used the right life of 3 years of over-the-road tractors, even if used in farming.
There is no way to defer that depreciation...….it is what it is, since the election has already been made (during year of purchase) as to how it is going to be depreciated.
Looks to me like one option for pushing income into 2018...…….and I would never advise this...…...would be to backdate the sale of the semi into 2018. Possible that such would work ok for the buyer also. Remember.....only have to have a valid obligation to pay in order to depreciate capital purchases.
However...…...that is not legal to do.
One observation...……….depending upon your age and a realistic projection of your income long-term and its source, and given that you apparently have children at home (EIC), you might consider incorporating.
If you do it right away, you can still move that semi into it, sell it there, and avoid a spike in your personal income for 2019.
Then, using a salary, drip out enough from the corp so that you are eligible for the EIC.
Make sure you have a good tax person behind you...…..one that understands corps......before getting on that train.
And, if you have had farm losses, or have been marginal as to profit, but the future looks ok...…….capture those loss years (upcoming) and roll those losses forward to offset future income. No way to really do this without a C corp.