What to do?

[NorthwoodsLife]

Wow!

My accountant, being from a farming family, and being a substantial landowner, is always in favor of me buying a new tractor.

Yes, I know cash is king, but if I can keep from sending Uncle Sam a big check by buying a tractor, what’s wrong with that? In these parts, a good used tractor is an easy sell, and anyhow, my heirs just might want to keep it to use on the several hundred acres we own. Right now, the tenants are doing the upkeep, but that might not always be the case.

I realize the MX4800 is just about the ideal tractor for my uses. I realize trading for the MX 5400 wouldn’t be an upgrade, but it would be a NEW tractor, and would satisfy the need for a tax write off. I really can’t understand the apparent lack of enthusiasm for the tax write off. Do you guys enjoy sending money to Sam?


Jimmyjazz said:
“It sounds like a need is being manufactured for an issue that doesn't exist by someone with nothing else to think about. This happens to me from time to time. I would do nothing if I were you. At 75 of age and having had lots of experience with this kind of thing you should be giving advice and not asking for it. If you want to keep things simple for your heirs leave them money and not another tractor.”


Yes, there is an element of this. However, if I can keep the .gov from getting a chunk of that cash, I ask again, what’s wrong with that? And at 75 years of age, yeah, I can give advice based on years of what my old Daddy called “bought experience,“ but I ain’t above asking for advice, either.

So.. Buy Bonds. Invest in secured securities. Buy overseas accounts. Do what the IRS bosses do.

It's over my head, and over my caring. At my age age in the 60's, I stopped giving a crap about nickels, dimes, and crap since the wife and kids are doing well.

You can't take it with you.

It seems like; You are concerned with your heirs more than anything. Do what you want, they'll thank you while you're in the grave. It's your money.

But a new tractor might make you happy for another day. But if giving your heirs wads of money makes you happiest... do it. They can spend it on new tractors and corvettes and boats and real estate. Hookers and cigarettes.

Good luck and God Bless you Sir.

 

[PaulL]

Yes, I know cash is king, but if I can keep from sending Uncle Sam a big check by buying a tractor, what’s wrong with that? In these parts, a good used tractor is an easy sell, and anyhow, my heirs just might want to keep it to use on the several hundred acres we own. Right now, the tenants are doing the upkeep, but that might not always be the case.
...
Yes, there is an element of this. However, if I can keep the .gov from getting a chunk of that cash, I ask again, what’s wrong with that? And at 75 years of age, yeah, I can give advice based on years of what my old Daddy called “bought experience,“ but I ain’t above asking for advice, either.

It depends how the write-off works. In my part of the world you get a deduction for buying something. But the deduction is only part of it. So you spend $50K on something, you get 39% of it back. So $20K the govt picks up, $30K is still coming out of your pocket. More importantly, when you sell that tractor, the govt wants their slice back.

Now, if you can buy the tractor for $50K, get $20K write-off, and when you sell it pocket all the cash, that's a great deal. But otherwise, it's just a cheaper tractor, it's still costing you some money. If you have use for the tractor, and you only have to pay 60% of the price, that's a great deal. But buying it purely for the write-off without actually having a use for it, that doesn't compute for me.

Like I say, depends on how the write-offs work in your part of the world.

 

[Runs With Scissors]

Hookers and cigarettes.

Ahh yes....the "Good Ole Days"..........Hookers, booze and cigarettes.......




To the OP: Since it sounds like your finances are in order, I tend to agree with the "just get the new one" crowd.

One day you (all of us) will be room temperature, and it wont make a "hill of beans" difference if you buy a new tractor or not....... you'll still be dead.

You could look at it like this.

Given the current rate of inflation (unless you actually believe .Gov's BS inflation numbers), buying a tractor that is kept up well, is like putting the cash in a safe at 0%.

It will erode at basically the same rate the tractor depreciates. So the only practical difference is that one way your heirs get the cash by opening the safe, or they get it by having to sell the tractor....Either way they get the same amount of cash.

If there is a tax advantage, well then I see that as a way to "Screw the Man", which I consider a "bonus"

Just for the record, I have ZERO investment/tax training, the above is just my take on life....

 

[NCL4701]

If it was strictly personal use and no tax advantage, I’d say keep the old one.

Business use so you can write it off, I’d get a new one every time the IRS depreciation schedule ended on the old one (assuming it doesn’t cause a cash flow issue).

Edit: And at this stage of my life I’m more in the position of heir than the one leaving. From that perspective, if your heirs give a crap about you, they’d rather see you enjoy your money than deprive yourself for their benefit.

 

[NorthwoodsLife]

Edit: And at this stage of my life I’m more in the position of heir than the one leaving. From that perspective, if your heirs give a crap about you, they’d rather see you enjoy your money than deprive yourself for their benefit.

Truth. Consider that OP.

 

[NorthwoodsLife]

Side story, my OTT friends:

My wife and I raised 3 children.... All the children are adults now and doing well.

I have a couple of past friends that only raised one child.... Their children are adults now and are also doing well.

The difference is that the 'one child' parents treat that one child like a god. A GOD. Inheritance and taking care of that one fully grown man or woman is their passion. Their ONLY goal.

Just Sayin'

I care about my kids. Love them in fact. But coming from a family with 4 siblngs, and raising 3 kids... One's perspective changes.

Having siblings makes the individual strong in spirit. Can do attitude. Or they crash and burn.

Rely on no one. Mommy and Daddy won"t be around forever.

Continued...

 

[NorthwoodsLife]

I had a very close friend in my grade school years. Think 7 years old to 11 years old.

He, was an only child.

Ah. Scott, I loved you man.

Anyway, Scott had everything. The latest Hot Wheels, and the most wanted GI Joe action figure stuff. He even got the GI Joe helicopter and frogman suit! And the Evil Kneivel motorcycle set!

But I had not much. I got a GI Joe from the salvation army store behind my dad's back cuz my dad said that those action figures are 'dolls'.

 

[redlevel]

Well, I think I answered part of my question this morning. Me and my helper were loading scrap tin and metal on a trailer. Got probably 1500 pounds loaded and moved the trailer to another spot. We had five-plus inches of rain Sunday night and Monday. Like a dummy, I pulled my old truck through a very low and boggy spot. Just wasn’t thinking. Needless to say, I bogged down my old 4wd 3/4 ton Chevy pretty bad. Had my doubts about getting out, especially with that trailer behind.

There was some higher ground in front of the truck, and I figured it was worth a try with a 20 foot chain and my MX4800. Put my hired guy in the pickup in 4wd-high, and hooked the tractor and pulled in 4th gear low range, 4wd of course. It didn’t even grunt! No spinning, jerking or cussing. Just pulled that load out of that bog with little effort.

I thought to myself right then, “forget about downsizing. When you need the weight and horsepower, you need it real bad.”

Needless to say, if I do trade, it will be a trade up to a little larger machine, or at least to one of equal weight as the 4800.

 

[PaulL]

I always figure it'd be hard to trade down. You'd always know what you were missing.

 

[GrizBota]

I’m a bit late to this discussion. I think you ought to get a new tractor if you want one and the finances are available for that purpose. I have a bad habit of keeping the old stuff when I buy a new one. My kids won’t thank me later.

For US federal taxes, if your current tractor is a farm asset and you sell it (presuming you deprecated it previously) you’ll need to claim that sale an income. If you buy a new (or even used) tractor you can deprecate it (7 year IIRC) or take a full write of the year purchased (Section 179 election).

I do buy farm equipment and take the Section 179 election. ATVs, tractors, trailers and trucks in the last few decades. It’s equipment I wanted regardless and it’s nice to be able to buy it with effectively pretax (or untaxed, at least on the personal income tax front) dollars, it’s essentially buying at a discount equal to my effective federal tax rate. I file a schedule F (farm), a C or SE may be different, I do not know.

I’m not surprised at all your MX pulled that truck and trailer out. My L pulled an F250 4WD crew cab with a 20 ft trailer loaded with 2 cords of wood up my 12% grade gravel driveway after the truck lost traction and sunk in the gravel. We figured something like 14-15k lbs. No fuss no muss. Tractor in 4WD and diff lock on, pulled that truck without a grunt.

 

[redlevel]

I’m a bit late to this discussion. I think you ought to get a new tractor if you want one and the finances are available for that purpose. I have a bad habit of keeping the old stuff when I buy a new one. My kids won’t thank me later.

For US federal taxes, if your current tractor is a farm asset and you sell it (presuming you deprecated it previously) you’ll need to claim that sale an income. If you buy a new (or even used) tractor you can deprecate it (7 year IIRC) or take a full write of the year purchased (Section 179 election).

I do buy farm equipment and take the Section 179 election. ATVs, tractors, trailers and trucks in the last few decades. It’s equipment I wanted regardless and it’s nice to be able to buy it with effectively pretax (or untaxed, at least on the personal income tax front) dollars, it’s essentially buying at a discount equal to my effective federal tax rate. I file a schedule F (farm), a C or SE may be different, I do not know.

I’m not surprised at all your MX pulled that truck and trailer out. My L pulled an F250 4WD crew cab with a 20 ft trailer loaded with 2 cords of wood up my 12% grade gravel driveway after the truck lost traction and sunk in the gravel. We figured something like 14-15k lbs. No fuss no muss. Tractor in 4WD and diff lock on, pulled that truck without a grunt.

Yessir!
My accountant decides which option to go with, either the 7 year depreciation or the Section 179. I bought a new 12K pound trailer in 23, as well as metal and trusses for a new pole barn. We will see what he does with those purchases. Probably the full write off since I sold out my cow herd in August. I file Schedule F.
An added factor here in Georgia is the Georgia Agricultural Tax Exemption (GATE Card) which exempts farmers from the state sales tax on agricultural purchases like seed, feed, fertilizer, and of course tractors and implements.

The thought came to me as I pulled my truck out of the bog yesterday: extra weight and hp in a tractor is sort of like a parachute, insurance, or a pistol. You might not need it often, but when you do, you need it very badly!