Posted by Goose on January 18, 2012 at 19:10:20 from (173.190.237.126):
In Reply to: Re: Eqipment loans posted by donjr on January 18, 2012 at 17:37:10:
You have to be careful with depreciation, though. Depends on purchase price, selling price when you sell, and how long you keep the equipment.
When I was farming in the mid '80's, there was a time when a lot of farmers were going under, and you could go to an auction and buy machinery for 50 cents on the dollar, or less. I bought an 856 Farmall, put it on a 10 year depreciation schedule, used it 9 years, and quit farming.
By the time I quit farming prices had gone back up and I sold the 856 for within $200 of the price I'd paid for it 9 years earlier. In getting my taxes squared away, guess what? The IRS wanted their depreciation back. It's called "recapture". In effect, I bought the tractor all over again, as I had to take a loan to repay the IRS the depreciation.
If I hadn't needed the money at the time, I could have kept the tractor and it wouldn't have cost me anything.
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