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Old 02-21-2013, 01:31 PM
 
12,683 posts, read 17,014,033 times
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Quote:
Originally Posted by Red Wolf View Post
When I was farming, very few farmers bought new machinery.

A farm is much different from a well drilling business in that farming requires many different types of machinery.
I'm not a farmer nor have I ever been but thank goodness there are still folks who understand this.

Reps for you!
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Old 02-21-2013, 01:35 PM
 
Location: Keosauqua, Iowa
9,200 posts, read 17,051,861 times
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Quote:
Originally Posted by Driller1 View Post
Yes, it is next to impossible.

Farm equipment is priced along the lines of well rigs.

That means $500,000 and up for a tractor....and that is just a start.

Or, you can buy junk....duck tape and a lot of wenches.
Quote:
Originally Posted by Submariner View Post
Love them wenches

Anything that includes wenches can not be a bad thing
Quote:
Originally Posted by Driller1 View Post
I am saying time is money.

That is why I buy the best equipment from the best dealers.

If I am broke down on the job it is costing me money.
You still don't get that you typed WENCHES when you meant WRENCHES?

Quote:
If you think drilling is easy PM me and I will let you try it this summer.
Been there, done that, got the T-Shirt (it says "Hopson Drilling").
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Old 02-21-2013, 02:03 PM
 
Location: Keosauqua, Iowa
9,200 posts, read 17,051,861 times
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Quote:
Originally Posted by Driller1 View Post
Now......the good part, it is all a write offs on your taxes.

So, your son will get all of the money taken from his pay checks back.
This isn't true. If a business claims a loss in more than 2 out of five years the IRS considers it a hobby which limits the amount of expenses that can be deducted to the income from the business. You will be able write of some of your living expenses as business expenses which will reduce the profit of the farm along with the tax liability, but the best case scenario in most years will be that the income from the farm won't impact your tax liability.
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Old 02-21-2013, 02:10 PM
 
Location: Keosauqua, Iowa
9,200 posts, read 17,051,861 times
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Quote:
Originally Posted by Red Wolf View Post
When I was farming, very few farmers bought new machinery.

A farm is much different from a well drilling business in that farming requires many different types of machinery.

Thankfully,today, there are many custom operators and most of the time it makes more sense to hire your 2 day job done rather than invest in the equipment and store it 363 days a year.
When my father-in-law gave up crop farming and rented out his tillable acreage in about 2003 his newest row crop tractor was an IH 656. I don't know the year, but they stopped making that model in 1973. His combine was older than that. He never had any downtime due to equipment failure, probably because he was obsessive about maintenance and had the service man out the moment something would develop even the smallest problem.
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Old 02-21-2013, 03:13 PM
 
797 posts, read 1,145,777 times
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Quote:
Originally Posted by duster1979 View Post
When my father-in-law gave up crop farming and rented out his tillable acreage in about 2003 his newest row crop tractor was an IH 656. I don't know the year, but they stopped making that model in 1973. His combine was older than that. He never had any downtime due to equipment failure, probably because he was obsessive about maintenance and had the service man out the moment something would develop even the smallest problem.
In spring of 84, I bought a 560 IH diesel at a farm auction for $2700.
From then until 2007 IT WAS MY MAIN TRACTOR.

Did all my field work ( plowed, ran a pull type combine, pulled corn picker , corn cultivated, cut all my hay, ran the hay baler )

I did not use it in winter as I had a 620 John Deere gas also.

I only chaned oil and put tires on that 560.
It blew a head bolt and gasket in 2007 and I ran it a little hot---------------cracked block.

23 years use out of a $2700 tractor !
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Old 02-21-2013, 03:37 PM
 
12,683 posts, read 17,014,033 times
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Quote:
Originally Posted by Red Wolf View Post
In spring of 84, I bought a 560 IH diesel at a farm auction for $2700.
From then until 2007 IT WAS MY MAIN TRACTOR.
I inherited a 560 although it was LP gas. At the time I had no rural acreage and it was too big to mow the 3 city acres I did have so I refurbed it and sold it for $3,500 to a fellow who had just bought a local 50 acre farm. I did have to have the head and valves reworked before I sold it but the old tractor always ran great. I recall using it some forty years ago planting a small field of wheat for my FIL.

Someone told me these old Farmall 560s are good as "puller" tractors but I never got into that. They are neat tractors and there used to be tons of them around here. Here's a pic of the one that I had.

Last edited by High_Plains_Retired; 12-20-2013 at 04:47 PM..
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Old 02-21-2013, 05:31 PM
 
24,841 posts, read 32,887,308 times
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Quote:
Originally Posted by duster1979 View Post
This isn't true. If a business claims a loss in more than 2 out of five years the IRS considers it a hobby which limits the amount of expenses that can be deducted to the income from the business. You will be able write of some of your living expenses as business expenses which will reduce the profit of the farm along with the tax liability, but the best case scenario in most years will be that the income from the farm won't impact your tax liability.
You my friend are wrong. I have never claimed a profit in the well drilling business and never will.

You need to look into things.

Farmers file a schedule "F" they are more forgiving than the schedule "C" small business file.
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Old 02-21-2013, 06:58 PM
 
797 posts, read 1,145,777 times
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Quote:
Originally Posted by Driller1 View Post
You my friend are wrong. I have never claimed a profit in the well drilling business and never will.

You need to look into things.

Farmers file a schedule "F" they are more forgiving than the schedule "C" small business file.

apples to oranges

you are not using non- business income to suppoprt your well drilling

This guy will be using non-farm income to fiance his farming and using his farm expenses to cancel out taxes from his non-business income.

no similarities at all between well drilling and farming
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Old 02-21-2013, 07:58 PM
 
Location: Forests of Maine
31,147 posts, read 50,318,661 times
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Quote:
Originally Posted by duster1979 View Post
This isn't true. If a business claims a loss in more than 2 out of five years the IRS considers it a hobby which limits the amount of expenses that can be deducted to the income from the business. You will be able write of some of your living expenses as business expenses which will reduce the profit of the farm along with the tax liability, but the best case scenario in most years will be that the income from the farm won't impact your tax liability.
It was '2 out of 3', then it changed to '2 out of 5', then around 2000 the IRS dropped that as a hard rule. Now it is merely a guideline. If you fail to meet this guideline, it may cause an audit, in which an auditor will want to review your business model. To see if you are trying to make a profit.

There are some businesses that simply do not show a profit very often. For those types of businesses it is expected that you might only show a profit once every 10 or even 20 years.

Which is why the IRS had to drop it as a 'rule'.

For example I have a parcel of forest land. You can not cut timber on the same land every year. You can not cut timber every 5 years either.

I have pushed the '2 out of 5' guideline many times. I have gone through 3 audits so far. In each audit we came out smelling of roses.
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Old 02-21-2013, 07:59 PM
 
Location: Forests of Maine
31,147 posts, read 50,318,661 times
Reputation: 19849
Quote:
Originally Posted by duster1979 View Post
When my father-in-law gave up crop farming and rented out his tillable acreage in about 2003 his newest row crop tractor was an IH 656. I don't know the year, but they stopped making that model in 1973. His combine was older than that. He never had any downtime due to equipment failure, probably because he was obsessive about maintenance and had the service man out the moment something would develop even the smallest problem.
Being obsessive on maintenance pays off
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