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Equipment sale tax implications?
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jakescia
Posted 1/12/2019 11:38 (#7239726 - in reply to #7238644)
Subject: If the recapture income is 80K........that is added into your tax return,



Oskaloosa, Iowa 52577

If the recapture income is 80K........that is added into your tax return, then it is mixed in with all other income and expenses, with the net being taxed according to the brackets.

You also have 24K of standard deduction to be included in that calculation.

Then...…...the brackets have become more favorable under the new law...…..the first 78K is taxed at 12% and 10%.

At 79000 the 22% begins.

I really cannot be more specific since I do not know what your other items would look like in your tax return.

Plus...…...the section 199A domestic production deduction kicks in, and provides a 20% deduction, based on the business schedules (Sch C and F).

Caveat--- Just remember that INCREASING the business schedules results in a 15% tax, even though it provides a 20% DEDUCTION, which is worth your tax bracket rate (say 12%) x the 20%.  So you might be spending 15% in order to save (12% x 20%) 2.4%.

Last comment-------- often the farmers overlook the benefit of paying at least some self employment taxes. Paying the SE taxes causes the disability and early death benefits of the Social Security program to kick in...…….and that is invaluable to a person with small kids.

It is beneficial enough that we calculate what electing the minimum coverage would do in a return, and comparing that to the taxpayer's circumstances.

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