High farm income year market bias?

[muddymiller]

Section 179 expensing is not tax avoidance, but tax deferrment. The tax is due when the depreciated out combine is sold for 250,000. AS for Patriot trading combines annually, is there a large enough demand for $250,000 used combines to make it a good move? Just wondering.

[GoredHusker]

Around here, there are quite a few farmers that get a new or different combine every year.  There are some that get a brand new combine every year.  There are some that get a one year old combine every year.  Then, there are some that get a two year old combine every year.  By the time the machines pass down by year three they are sold to someone who will run them multiple years.  To answer your question, yes there is quite a demand.  The same dealership just rolls them on out depending on who has what program in mind.  I've been told the ones that do the best in this scenario are the guys who buy the one year old machine every year because the bugs have been worked out of them.  I try to run the same machine for 10+ years, but everyone has a little different perspective.  For the guys that get different equipment every year, they in a sense are just renting the equipment which in terms of taxes would be allowed to all be written off anyway.  If there's one thing the 80's taught me, it was that those who bought machinery to avoid taxes were the first ones being sold out by the banks.  I have been told that the demand is extremely high for new paint this year because it will be the last year before the new emission engines come out, and no one wants to own one of these. 

[smokeyjay]

No combine is completely worn out after one year.  So, is that logical?

[time:thetippingpoint]

Being able to roll combines every year is just another unintended consequence of a zero interest rate policy.

Depends on what a farmer thinks is important and really shouldn't be something the government or Krafty have any input on. For us, a combine lasts about 18,000 acres and then we trade the carcass for a new one. Works for us. A new one every year would work too, but we find cost per acre/bushel lower our way. It might not be for others, it should be up to them not me. Frankly, we love to see competitors burn capital on big green paint. 🙂

The combine roll games will end some day, just not any time soon. Capital is free and abundant. Enjoy it while it lasts.