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Author Topic: Income Taxes - 2019  (Read 5054 times)

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Offline terrifictimbersllc

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Re: Income Taxes - 2019
« Reply #20 on: February 20, 2020, 07:55:59 AM »
When purchasing from another business, can it be 2nd hand from a seller on woodweb? Think woodworking machines, etc.  Can it be from craigslist if the transaction is recorded? or does it have to be a taxed, business to business sale?  
One main rule for business purchase is that it be "ordinary and necessary" (for your business).  Sure you can buy something used from someone else. However if you dont have a receipt to prove you bought it that could be a problem if you get audited. So, pay cash and dont get a receipt, no-but see last sentence.  Write a check and dont get a receipt, iffy (IMO). Pay cash or check and get a receipt or invoice marked paid, all good for proving your purchase.  If you buy from someone who isn't willing to make out a receipt,invoice, or bill of sale that person is probably going to want cash too. If you're sure the item isnt stolen then nothing wrong with buying it but maybe take into consideration that you shouldnt deduct it on your tax return and price accordingly.  Unless it bothers you that you're participating in the underground economy.
DJ Hoover, Terrific Timbers LLC,  Mystic CT Woodmizer Million Board Foot Club member. 2019 LT70 Super Wide 55 Yanmar,  LogRite fetching arch, WM BMS250 sharpener/BMT250 setter.  2001 F350 7.3L PSD 6 spd manual ZF 4x4 Crew Cab Long Bed

Offline petefrom bearswamp

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Re: Income Taxes - 2019
« Reply #21 on: February 20, 2020, 10:08:35 AM »
All my finances are on quicken, one checking account with different categories.
With 3 pieces of timberland plus my get rich quick sawmill business all I do is print off a report with all of my timberland and mill income and expenses and send it off to the accountant.
All of the income and expenses runs thru as farm income.
Granted my income from these enterprises is pretty small except when I sell timber and accountant fee Runs 500 to 550 per year but well worth it IMO.
Kubota 8540 tractor, FEL bucket and forks, Farmi winch
Kubota 900 RTV
Polaris 570 Sportsman ATV
1 Husky 1 gas Echo 1 cordless Echo vintage Homelite super xl12
241 acres of woodland

Offline Greyman

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Re: Income Taxes - 2019
« Reply #22 on: February 20, 2020, 06:20:42 PM »
Be careful - taxes are a lot different for 2019 than before.  Standard deductions are larger so it won't usually be an advantage to make donations, claim mortgage interest, medical expenses, etc. etc.  Read up on it and be wary when you think (or anyone else says) "the way I always did it was ______".  My business is consulting so I don't have capital equipment, so not sure if/how that changed.

Offline Walnut Beast

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Re: Income Taxes - 2019
« Reply #23 on: October 07, 2020, 09:05:09 PM »
Can a sawmill be depreciated as ag if your cutting your own trees on your own farm ? 

Offline farmfromkansas

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Re: Income Taxes - 2019
« Reply #24 on: October 07, 2020, 10:21:24 PM »
I actually farm for income, and my accountant is a neighbor. I ask him if I can buy this or that and if I use it on the farm it is deductible.  Most of my equipment is just expensed in total the year I purchased them.  Only buy a piece of equipment if I have income.  Looking at a newer manure spreader this fall or winter, after the season is over, the price goes down.  When I bought a new table saw, I used it to square up used pieces of waferboard to line my shop walls.  He asked if I used it to fix up the building, and did so he wrote it off. Guy has done accounting for 50 years, hope he stays with it as long as I live, he is about 8 years older than me.
  You guys who want to buy and use equipment on your acreages, need to visit with your accountant prior to the purchase.  Then you know where you stand.





w
Most everything I enjoy doing turns out to be work

Offline Walnut Beast

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Re: Income Taxes - 2019
« Reply #25 on: October 07, 2020, 10:47:41 PM »
Thats kinda what I thought if your using the sawmill on lumber your using on a building where your storing equipment used on the farm

Offline Sedgehammer

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Re: Income Taxes - 2019
« Reply #26 on: October 08, 2020, 12:08:26 AM »
Loses can be carried over from one year to the next. I forget what form it is.

Offline WV Sawmiller

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Re: Income Taxes - 2019
« Reply #27 on: October 08, 2020, 09:12:08 AM »
   Not income taxes but Sales taxes I guess - I have several customers who buy from me who are tax exempt. One local outfitter sells plants in the spring and buys tomato stakes from me to re-sell. He is tax exempt. Sometimes I do mobile sawing for farmers who use the lumber for farm purposes and they are tax exempt. Sometimes I saw or sell to craftsmen who use the slabs and lumber and such to make products for resale and are tax exempt. Sometimes I saw or sell to builders who will use the lumber or beams or such for part of their construction/building business and they are exempt from sales tax.

   Just because a customer has a tax exemption number does not mean my services are tax exempt. They sign a form that the purpose for the wood is tax exempt. If I get audited I show the forms as the reason I did not collect and submit the state sales tax. If the tax people want to challenge it they need to go see the customer. A farmer having me saw logs into lumber for a vacation cabin has to pay sales tax. That same farmer using that same wood to build a barn or shed for storing feed or farm equipment could claim sale tax exemption. If they have a tax number and sign the form stating it is for exempt purposes my job is done and the burden of proof shifts to them. The same is true with non-profit customer organizations.

   I think many states do not charge sales taxes on services such as sawing but only for products such as sawed lumber. Other states, like WV, make me collect sales tax on all my services and products so if you are starting out check your local regs.
Howard Green
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Dad always said "You can shear a sheep a bunch of times but you can only skin him once"

Offline mike_belben

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Re: Income Taxes - 2019
« Reply #28 on: Yesterday at 08:24:17 AM »
What will really get you an audit is having your number of 1099 incomes on tour schedule C not match what number of 1099s these institutions have sent in.. That triggers the system for automatic audit so claim all your 1099 incomes perfectly.  



Next, youve got to categorize correctly.  A new wheel loader cant be expensed in one season.  It has to be depreciated. A $6k engine overhaul for a tractor cant be expensed, its gotta be depreciated.  The rules are muddy so just use $1000 as a threshold.  Over a grand depreciate and youll stay in good shape.  During audit they can throw out big expensed items and have you paying the difference. 


You can deduct the price of overhauling old business equipment over a number of years, say a project tractor.  If you bought it in 2014, did trans in 16, paint in 18, tires in 19 then ran it for profit in 20 you just put all years receipts into a folder and then begin depreciating the total the year it goes into service.  


For face to face transactions off craigslist or FB.. Screenshot the ad, any important texts, take pic of the item in your truck or trunk when you go get it, and write yourself a receipt with the date, item, amount, and persons name address number, anything you got on them. If its cash keep your atm withdrawal slip and write "tablesaw from craigslist" on it.  Print the images and staple it all together. Drop the packet in your equipment folder.   No problem.  
Revelation 3:20

Offline Walnut Beast

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Re: Income Taxes - 2019
« Reply #29 on: Yesterday at 08:40:19 AM »
Time to break out the dress clothes. CPA MIKE 😂

Offline mike_belben

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Re: Income Taxes - 2019
« Reply #30 on: Yesterday at 12:42:29 PM »
I have a great lawyer and a great accountant.  And ive paid them both in guns and ammo before. 

;)
Revelation 3:20

Offline Sedgehammer

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Re: Income Taxes - 2019
« Reply #31 on: Yesterday at 03:24:18 PM »
I fired our accountant several years ago.  Wouldn't take any risk at all with tax deductions, so what was the use in using them? Started using turbo tax way back when. Was audited for 2014. They claimed we owed 87k. Paid them $807 and didn't even owe that, but figured a small token for their time was a better investment then a total embarrassment. Unless your taxes are very complicated, I'd never hire an accountant again.

Offline mike_belben

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Re: Income Taxes - 2019
« Reply #32 on: Yesterday at 06:42:10 PM »
Having a CPAs name on your return reduces your audit odds considerably compared to self filing.. If your 1099s are in order anyway.  
Revelation 3:20

Offline Sedgehammer

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Re: Income Taxes - 2019
« Reply #33 on: Yesterday at 08:14:39 PM »
Having a CPAs name on your return reduces your audit odds considerably compared to self filing.. If your 1099s are in order anyway.  
I'll take the risk cuz we've saved well around 5, 6 figures over the years all told then if we'd had a cpa do it.

Been audited twice. Once in 97 also. They asked me why i didn't use numbered invoices. I said why should I make your job easier? They said I owed $27k then, paid them $1,700.

Oh, another funny. They didn't want to accept my daily/yearly mileage report (66k+). They wanted me to back that up with some oil change mileage documentations. I said the law states one or the other not both and it's my choice. They took my log book. 

Offline Walnut Beast

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Re: Income Taxes - 2019
« Reply #34 on: Yesterday at 08:38:51 PM »
CPA most are or Tax expert  or no CPA ???

Experienced Sawyer or Someone sawing no experience.


How do you think things are going to turn out 95% of the time 😂😂

Offline Sedgehammer

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Re: Income Taxes - 2019
« Reply #35 on: Yesterday at 08:58:42 PM »
CPA most are or Tax expert  or no CPA ???

Experienced Sawyer or Someone sawing no experience.


How do you think things are going to turn out 95% of the time 😂😂
big difference. do you know how to saw? do you know how to do math? do you know how to read? do you know how to ask questions if you don't know? I don't know how to saw, but I know how to do those other 3 really well.
I'm basing it off of my/our experiences. we've saved a lot ad i mean a lot. The 2014 audit we'd have paid the 87K when we filed if the cpa did it most likely. i paid $800. I'll take that.

Offline mike_belben

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Re: Income Taxes - 2019
« Reply #36 on: Yesterday at 09:09:15 PM »
Mines a hundred bucks a year and punches in whatever i put on my xcel spreadsheet file that tallies the books.  Saves me the grief of turbotax, and obviously hes a pro.. Im not. 
Revelation 3:20


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