Employment/Tax Question

[Jim14510]

I'm having all of my clients who have income showing buy new equipment now and take the full depreciation all at once instead of the schedule bullshit we had always done but for 2016-2024.

I'm missing your point. If you are actually worried about the TCJA stuff actually sunsetting and not getting extended why fully depreciate now?

I'd be shocked to see section 179 go anywhere. No politicians are putting their name on fucking the small business owner. Either side.

Bonus is already on its way out and I'd be surprised if it comes back anytime soon. Only thing the farmers should be rushing to buy are machine sheds or other single purpose buildings to get the bonus. At 60% in 2024 even that's questionable. Still better to do it now than a year or two from now though.

If you take opees example in a bubble and he buys 135k of equipment and that equipment makes him 100k per year for the next 5 years writing off as much as possible in year 1 would be a very bad idea.

Lots of scenarios though. If you can write off equipment instead of prepaying expenses/deferring income then you 100% do that. Leave that flexibility for prepaying/deferring open in case you need it in a year or two or more.

 

[God is a Husker]

I'm missing your point. If you are actually worried about the TCJA stuff actually sunsetting and not getting extended why fully depreciate now?

I'd be shocked to see section 179 go anywhere. No politicians are putting their name on fucking the small business owner. Either side.

Bonus is already on its way out and I'd be surprised if it comes back anytime soon. Only thing the farmers should be rushing to buy are machine sheds or other single purpose buildings to get the bonus. At 60% in 2024 even that's questionable. Still better to do it now than a year or two from now though.

If you take opees example in a bubble and he buys 135k of equipment and that equipment makes him 100k per year for the next 5 years writing off as much as possible in year 1 would be a very bad idea.

Lots of scenarios though. If you can write off equipment instead of prepaying expenses/deferring income then you 100% do that. Leave that flexibility for prepaying/deferring open in case you need it in a year or two or more.

I meant clients showing lots of income (usually cuz they sold land) and they are wanting to deduct as much as they can. (Client's letting the tail wag the dog, tail as old as time. Pun intended.)

The TCJA is set to sunset, at a minimum I don't think anything is gonna get passed quickly even if all 3 branches of government are ruled by 1 party again. If we have some sort of split I don't see any new Tax Code getting passed for at least 1 or 2 years so we will be back to the old ways.

OP's example is different because it's used equipment (likely already has been depreciated) and he doesn't have a stated alternative goal of trying to reduce income. Most of my clients were in the market for some kind of equipment anyway so all we did was accelerate their purchase timeline.


PS: only benefit to reverting back to 2015 Code for my clients will be 1031s going back to no rules. The TCJA made the words "like kind" actually mean real for real or chattel for chattel. Before TCJA the very issue I'm talking about (sale of land creating high income liability) was an easy fix because we could just 1031 the Land Sale into an Equipment purchase.


PS: PS: other benefit to us if TCJA sunsets is that the Federal Estate Tax threshold reverts back. Meaning a much higher % of farms and ranches might have Federal estate tax consequences. I haven't done a Special Use Valuation to lower family farm/ranch estate's value to under the Federal tax threshold since 2015....but I kind of hope I get to dust off the ole wings and start doing it again because they are a cash cow. I was averaging $10-15,000 per client. (My billable rate will be adjusted for inflation and my age/experience being greater now than it was then.... let's make some money Jimmy baby!)

 

[Jim14510]

The TCJA is set to sunset, at a minimum I don't think anything is gonna get passed quickly even if all 3 branches of government are ruled by 1 party again. If we have some sort of split I don't see any new Tax Code getting passed for at least 1 or 2 years so we will be back to the old ways.

They may not pass a new tax bill but I bet some of the TCJA that expires in 2025 will get extended. Especially it it's all Pubs. The shit I don't care about will get extended if its dems. Hopefully they extend the QBI deduction at least.

PS: PS: other benefit to us if TCJA sunsets is that the Federal Estate Tax threshold reverts back. Meaning a much higher % of farms and ranches might have Federal estate tax consequences. I haven't done a Special Use Valuation to lower family farm/ranch estate's value to under the Federal tax threshold since 2015....but I kind of hope I get to dust off the ole wings and start doing it again because they are a cash cow. I was averaging $10-15,000 per client. (My billable rate will be adjusted for inflation and my age/experience being greater now than it was then.... let's make some money Jimmy baby!)

If they do nothing with estate tax it will go back to 2017 inflation adjusted amount. Appx 7 mil. I doubt that increases our business much. If dems got control I could see that dropping to 3-4. That would be enough to pick up some stupid rate business.

PS: only benefit to reverting back to 2015 Code for my clients will be 1031s going back to no rules. The TCJA made the words "like kind" actually mean real for real or chattel for chattel. Before TCJA the very issue I'm talking about (sale of land creating high income liability) was an easy fix because we could just 1031 the Land Sale into an Equipment purchase.

You could never 1031 land for equipment. The TCJA took away like kind for equipment to equipment. Which really isn't a big deal assuming you can still 179 the purchase. Farmer trades in combine and you're already maxed on 179 so it's not nothing post bonus depr.

Effectively same thing when bonus was 100% though. Sell land and buy a shit ton of equipment. That's probably what you meant.