Retiring and selling equipment

[Welder Dave]

The track I did all the prep. at was practically my second home. I thought I had a lot of friends in the club but apparently not. The new president had the most to do with the club not supporting me though. I guess I can take pride in the fact that I found land to build a track and had it rezoned specifically to run an MX track. I think that would be next to impossible to do today. People generally think anyone who rides motorcycles are in a gang and up to no good. A snowmobile track wouldn't have near the whining from other land owners.

 

[Welder Dave]

I got an estimate to replace my pole shed and it came in at $80,000 incl. tax. for materials and labour to build it. Pretty much double what I paid in 2015. Labour was $30,000 which I think is a little high. It is like new but I'm not sure if a pole shed appreciates or depreciates in value. Obviously if it was really old and showing its age would lower its value quite a bit but it's like the day it was completed.

 

[Andyinchville]

Watch the taxes, if you dump it all at once, you are going to have quite a tax bill. Dumping it piece by piece over a couple years may keep you from paying more in taxes. I am not a tax advisor obviously, but I would talk to your tax person on their thoughts.

I'm not a tax expert myself BUT I would NOT worry about any income from the sales of used equipment since chances are you paid more for it when it was bought earlier in the equipments life .... in fact you might be able to claim a LOSS in income for the year to help you offset your current year's income .... If played correctly, almost no self employed person should have to pay taxes ... OK big claim BUT ever see news stories where big companies make billions but pay little or no taxes ? ... same idea

 

[Welder Dave]

I don't think the equipment will figure in any taxes. I'll probably have to pay some capital gains tax though. I'm not sure if business losses account for anything.

 

[KSSS]

It works like this. You pay for a piece of equipment. You depreciate it either 179 or over a number of years. Once you sell it, it becomes income. So if you paid 100k 5 years ago for that machine, you sell it for 50K today. That shows up as a 50K addition to your income and its all income. That is how you can end up in a tax mess.

 

[Welder Dave]

I'll have to talk to the tax people.

 

[BC Placer gold]

^^^Some of our older trucks/equipment we no longer put “on the books” for this very reason….

 

[BC Placer gold]

I'll have to talk to the tax people.

That’s a good idea, as it could prevent negative tax implications..

 

[Georgia Iron]

If you plan it out, the same year you sell can be the year you get a new truck, or a new machine for another write off. Balances out.

In the US we have a 10-31 exchange for property to help us. A middle man receives and holds the sales proceeds (cash). Then provides the funding for another property purchase. You pay a fee typically 1000.00 to 1500.00.

You pay zero gain. You only have so many days to complete the deals and to identify replacement property.

On your primary residence you are sheilded on the first 250k profit 500k if married if you have lived in it 2 years.

So if I was going to sell the quarry my property, I would already have a replacement lined up. Or make the deal happen when you do.

Also in the US when you 10-31 into a new property your basis starts over with the purchase of the new property. On rentals this is great because you now get the current deprecation for the higher price. This saves you 1000s in taxes. It actually setup so that it is in your favor to sell and replace. Biden was trying to strip that from us.


Remember to plan it out from start to finish.

 

[suladas]

Canada taxes are different, also depends how you claimed the equipment, I always lease the equipment to my company that I do the work under.

A little birdie told me if you sell it in cash or partly cash you can claim the amount it sold for as lower then what you actually got to avoid some taxes, also being in canada you have to charge 5% GST. Not like i'd do anything like that though

 

[KSSS]

Yes, you guys in Canada surely have different rules. That said, I doubt you can sell a piece of your equipment without claiming it as income. If you can, I will start lobbying for Idaho to become a Province of Canada

 

[zhkent]

The quarry wants your property, check with a realtor and make sure it is a fair offer first .

Then make a list of the price you think is fair for the equipment. Not a sky high, but fair price .

Add that equipment price number to the sale price of the property, and tell the quarry it's one price , property and equipment included. They can deal with selling whatever they don't want.

If that doesn't work, your equipment being allowed on the property, for six months after the sale to allow you to sell it, would be a alternative. But it would sure be easier to sell equipment and property, all in one shot.

I think with your health issues, the quarry offer sounds like a great way to get out from under all the work of your track and equipment.

And add in the building, or maybe it was. Bet they'll pay a fair price for it all.

Figuring out your next adventure might be harder.
Be nice to be appreciated if your doing service work.

 

[Welder Dave]

The building was part of the deal. Sounds like I might be able to still use the shop indefinitely. They don't really need it. This would great if I could store my smaller equipment over winter.