Re: Tax treatment on pulling tractors

	Tax treatment on pulling tractors December 19, 2010 05:14AM
1040	Okay I just bought this Pro farm pulling tractor . What do I do with the expense tax wise. Can I depreciate it on the farm books or what do I do with it. Any tax experts out there?? Reply Quote

	Re: Tax treatment on pulling tractors December 20, 2010 02:05PM
whatido	If you have a business but the name of the business on the side somewhere and use it for an advertisement. Works for my CPA! Reply Quote

	Re: Tax treatment on pulling tractors December 20, 2010 02:14PM
Anonymous User	we spend alot on our old 1066 it need a lot of parts like new turbo yearly fresh head work dyno time . lol depends on how much you can write off. Reply Quote

	Re: Tax treatment on pulling tractors December 21, 2010 12:20AM
Mystic Eye	How much you write off kinda depends on... 1. How good you look in a orange jumpsuit. 2. If you like wearing bracelets. Reply Quote

	Re: Tax treatment on pulling tractors December 21, 2010 01:44AM
CPA	Tractor pulling is not considered a profession so it is classified as a hobby. You are only allowed to write off expenses to offset your income. So if you had $2,000 in winnings for the year and $7,000 of expenses, you would only be allowed to write off $2,000 of your expenses to offset the income. This results in no income and therefore no tax liability. Reply Quote

	Re: Tax treatment on pulling tractors December 21, 2010 08:29AM
ih puller 966	get the right person doing your taxes and they can write it off just repairs in the end Reply Quote

Re: Tax treatment on pulling tractors December 21, 2010 09:02AM

tugger

Registered: 03/31/2008
Posts: 267

The right way to do it is to have a company sponser your tractor. That company can deduct the money that it give you for your tractor as advertising. As long as the company can prove that the sponsership will bring in business, it is ok.

Example:
XYZ farms give Joe 20,000 for his pulling tractor. That tractor going down the track catches the attention of a hog buyer who then contacts XYZ farms and buys pigs from them because he sees XYZ farms on the tractor.

Now here is the IF's

XYZ farms can be owned by Joe but it better be a corp so there is a seperation.
The tractor can not be owned by XYZ farms but by Joe himself thru a seperate corp.
The money has to have a trail and you can NEVER let the XYZ farms buy a part. So it has to be figured in to Joe's company that actually owns the tractor.
The good thing about this it that if you ever get sued because of the tractor, there is a seperation between you and the tractor.

A good tax guy will set this up. And you want to do it right. Otherwise the tax liablity is really ugly

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	Re: Tax treatment on pulling tractors December 26, 2010 10:40AM
Gene	Do like most do who farm and tractor pull - USE YOUR WELLFARE check to put in your puller ; tax payers dont mind , been doing it for years Reply Quote

	Re: Tax treatment on pulling tractors December 21, 2010 09:07AM
business owner	There are ways to write anything off. It kind of depends on what kind of business you own. It basically boils down to proving that your business benefits from your tractor pulling expenditures. It could be from advertising or R&D. Reply Quote

	Re: Tax treatment on pulling tractors December 22, 2010 02:41AM
Anonymous User	Talked this over with tax guy last week actually. Simplest way is to inform him you bought a tractor, nothing else. Dep. it out and just right off repairs and expenses. Reply Quote

Re: Tax treatment on pulling tractors December 22, 2010 06:37AM

CPA

If your tax accountant doesn't follow his ethical standards they will do this for you. There is a reason they don't want to know what your actual expenses for tractor pulling are so they can deduct them as business/farm expense through repairs and maintenance (hope the IRS doesn't catch you on this - take your chances i guess) As far as setting up a corporation for tractor pulling and having a farm or business sponsor it is a wash. Sure the business will get the deduction for the sponsorship as an advertising expense, but don't forget the tractor pulling business will have to report the sponsorship income. I bet almost all tractor pullers are not doing there taxes right buy writing tractor pulling expenses off through some other business/farm or not reporting any of there income (prize winnings, year end points money,ect and advertising income). The said part is your accountant is letting you do this even though they know it is not right.

I have no tractor pulling clients, but was curious if pullers are issued 1099's for there winnings,ect. Also if they are issuing 1099's to the businesses/people that do repairs on there pulling vehicles (if they don't repair them themselves). Just curious.

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Re: Tax treatment on pulling tractors December 22, 2010 07:16AM

business owner

My business is not a farm or selling anything to do with motor sports. The way my accountant advised me is to run everything through as an advertising expense. The thing that I will have to prove at an audit is did my business benefit from the advertising. In my case the answer is yes and there is a paper trail to prove that. For me it was a good place to advertise.

Another thing to remember is that being able to write something off as a business expense, doesn't make it free. For example if your pulling tractor costs $50,000. You are still spending $50,000 reguardless of it coming out of your personal account or from your business account. If it comes out of your business that is money that you would either spend on a different business expense or take as profit. What you are actually saving is the tax amount, which can be significant. But my point is that just because you are running it through a business it is not free.

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Re: Tax treatment on pulling tractors December 22, 2010 07:40AM

CPA

Advertising is a legitamate expense and it is only deductible if it benefits the business and generates revenue. If the IRS comes in and audits your advertising expenses (because they seem excessive), you will be required to prove to them what revenue was generated directly from that advertisment (which can be a difficult task - how can you prove the spectator in the stands came and bought your product). If the IRS wanted to be strict - the burden is on the taxpayer to provide this evidence and who keeps that kind of records/books. So, if you advertise on a tractor for $5,000 and you only generate $2,000 in sales from that advertisment - you are only allowed to deduct $2,000 as advertising expense (if you follow the IRS code). As far as that farmer that wants to deduct advertising expenses for sponsoring his own tractor using two seperate businesses, good luck getting this by the IRS - I'm guessing spectators are not coming to buy your crops/milk/beef as most of these are brought to market or grain elevators.

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	Re: Tax treatment on pulling tractors December 22, 2010 08:01AM
Founding fathers	Watch Glenn Beck & read your Constitution. Reply Quote

	Re: Tax treatment on pulling tractors December 22, 2010 10:01AM
Sales Tax	OK So I live in WI and have to pay 5-5.5% sales tax on everything I buy for the tractor in WI. I have not met a farmer that has paid sales tax on tractor pulling parts. Then they deduct the cost of the parts to yet. So if you pull and are not a farmer or a "business man" pulling costs you 20-30% more than those guys. Reply Quote

Re: Tax treatment on pulling tractors December 22, 2010 10:44AM

Don't tell

I own a grading and trucking business and that $4000.00 pump from columbus went on a mack dump truck. The $3500.00 to the performance shop was machine work to rebuild the engine. The $1500.00 injectors were for the bulldozer. $3000.00 turbo was for the semi truck. we have old equipment this is all legit. The enclosed trailer is a trailer the semi to pull it is a semi the fuel that went in to it the tires that went on it who cares its all business expenses. Im not hoarding money I am doing my civil responsibly and putting it back in to circulation to keep the economy moving. I should get a tax break for spending money aint that how obuma want to get us outta the recession spend our way out.

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	Re: Re: Tax treatment on pulling tractors December 22, 2010 12:47PM
Anonymous User	Does the "goverment" allow us to to check THEIR books to make sure they are "spending" our tax money wisely???? It is a one way street with the IRS and the Gubberment. This is crap and it will be time to get back to small gvmt and less regs soon, or it will be too late. "Oblama" and his kind need to go bye VERY SOON!!!! GO TEA PARTY!!! Reply Quote

Re: Tax treatment on pulling tractors December 23, 2010 05:58AM

wld4x4

I went through an IRS audit back in the mid 80's for my pulling operation. It was the very first year I filed the operation.
I didn't hide anything and had it all down in black and white. One mistake they found was because I wrote off 1/4 the cost of a new dually for the pulling operation. They asked how I come up with 1/4 and I said because I use it 3 months a year for hauling my puller around. They wouldn't accept that figure so they let me refigure the actual milage with a pulling schedule and a road map.
I can still remember the letter from the IRS saying they would "Acept As Filed"
In the aduit I point blank asked her if I should be doing it as a hobby or buissness and her words were
"Oh you deffinatly have a buissness here"

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	Re: Tax treatment on pulling tractors December 23, 2010 06:34AM
hidden cash	Hide your money in your mattres you say! What was your address again? Reply Quote

	Re: Tax treatment on pulling tractors December 23, 2010 01:23PM
1040	Interesting. Did you have a company just for pulling or did you write it off on the farm books. Just trying to figure out if I can write this pulling tractor off on the farm and survive an audit Reply Quote

Re: Tax treatment on pulling tractors December 24, 2010 01:53AM

Don't tell

only give enough information as needed the tractor you bought is just another farm tractor. Never mention tractor pulling to the CPA receipts form machine shops that say IH for exlample if you have a IH what is the difference? Why is it always so hard to find a use in business for a play toy? I have known people that have had dump trucks and the wrote off ATV'S. Tractors go with farming more than they do with landscaping grading and trucking. When you get recipts from people and companies does it really have to say tractor pulling on it??? You get a set of billet pistons made recipt just say pistons not billet or pulling on it. Its all in how you mask the paper trail.

The government gives to those who don't want to work for it so take a little back that you worked for!!!!

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Re: Tax treatment on pulling tractors December 24, 2010 02:54AM

Bill R.

Registered: 05/05/2008
Posts: 124

I was pulled over several years ago because I did not have a combo registration on my pickup. I was running about 23000 pounds with a goose neck. I went to court and I claimed it was a hobby operation and I should not have to register it in combo because it was not commercial. I was asked "Do you win any money" and I replied "If I am lucky" . To that the justice of the peace replied "Then you are in business". From that day forward I write off everything in my pulling operation as a business. You can't have one law saying you are a business and another law saying you are not. My "business" looses money every year, a LOT of money some years. I follow rules and this was spelled out for me by the court system. Certainly this is a gray area as I would bet some justices would say it was not a business, but I kept the ticket stub and will use it if and when I am ever audited.

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Re: Tax treatment on pulling tractors December 24, 2010 07:46AM

wld4x4

I was filing the pulling only and claiming it as such, everything laid out and by the time I was done with the audit they had shown me even more things I hadn't even thought of to write off.
I had an older tax man at the time and he went with me. I was in my 20's and I can remember him telling me your not hiding anything so don't worry. I also think he knew more about the tax laws than the young woman conducthing the audit.

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Re: Tax treatment on pulling tractors December 28, 2010 01:55AM

CPA

IRS will allow as a business if you show any profit in 2 of the last 5 years (general rule). If you have a business with a loss year after year, they will argue that it is a hobby and not a business. It is the CPA's judgement to file your return as you want it - there must be a more likely than not chance (50% or more) that the argument would hold up with the IRS/Court. Then if there is an audit, some IRS agents are more lenient than others. Probably the best way to go about it is to get a private letter ruling (you pay a fee and the Court will determine if you should claim as a business and allowable expenses before you file your return).

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