Made first money off of the CNC milling machine

The local IRS agent reads this news group and has made notes to look at your next year's tax return to see how you report this money!

Paul

Naturally, I report all my income.

Naturally.

Paul

That's the only way he can deduct all the toy^H^H^H legitimate expenses. They have not yet figured out a way to tax you on the basis of enjoyment.

You are getting closer.

Not that they aren't working on that... The Beatles song, Tax Man, will be relevant for a long long time...

Jon

I take it you don't drink alcohol, smoke tobacco, or dine at fine restaurants. ;-)

Cheers! Rich

We could solve all our taxation problems by replacing the income tax with an outgo tax. Don't tax what people _earn_ (or steal, etc.), tax them when they _SPEND_ it!

Buy a $10,000,000.00 mansion, pay $1,000,000.00 purchase tax. Buy a $100,000.00 diamond necklace for the princess's coming out present, pay $10,000.00 purchase tax.

Pay $6,000.00 for a designer suit, pay $600.00 purchase tax. Pay $600.00 for a decent working suit, pay $60.00 purchase tax. Pay sixty bucks for a passable suit at the Salvation Army thrift shop, pay ZERO tax; grocery store food, medicine and medical supplies, and pre-owned items would be exempt. (We might need a little discussion about used cars and used houses.)

And this should appease the "tax the rich" crowd - if somebody spends $500,000,000.00 on stock certificates, commodities futures, bonds, or etc. on Wall Street, he pays $50,000,000.00 purchase tax. >:->

But, of course, the fat cats (of both wings) will fight it tooth and nail, because they wouldn't be able to evade it like they do now with the income tax. When you write the boat store guy your check for $350,000.00 for the custom Cigarette, it's a little hard to hide it; he collects the $35,000.00 purchase tax at the Point of Sale. >:->

And it would encourage saving on the part of those of us who don't need much stuff. :-)

Cheers! Richard the Dreaded Libertarian

I pay the same tax whether I enjoy it or not.

Tax poverty, I say. Whatever you tax you get less of, and who needs more poor people?

Perhaps you haven't noticed that there are a few states left that do not have a state income tax, only a sales tax. I for one favor a flat tax as the only fair option. There is no excuse for taking a higher percentage tax from those who are better off, someone making $10k and someone making $10m should be paying the same percentage tax.

Rich needs to stop smoking what he is smoking, and when cannabis effects finally recede, read about sales tax and VAT.

What about the grocery store that makes a 1% margin on sales? Or the grocery wholesaler that makes a 2% margin on sales to the grocery? Or the farm that makes a 5% margin on the food they grow? Now, food prices will be inflated by 50% or more by government taxes. (I'm sure it will really end up double or higher, I just can't think of all the other middlemen right now.)

Jon

But, now you qualify (if you didn't before) for the incredible government giveaway called "exemption for business use of your home" IRS form 8829.

Also, in Missouri (don't know about IL) they have incredible exemptions on state use tax for anything that keeps a machine running or upgrades it. So, a CNC conversion or retrofit of a dead control should be able to be bought tax-free, assuming the original machine was capital equipment. Also, drill bits, end mills, oil, etc. are tax-free. I had to print out the relevant state tax commission rulings and read them three times to believe what I was seeing.

I have no idea if other states have such a generous arrangement.

Jon

Congratulations are in order.

Wes

You have to be careful of such seemingly good exemptions, since they may end up getting you stuck paying business tax on your personal property. Trying to explain that 5% of the use of your machines is for business and 95% for personal enjoyment will confuse the hell out of any auditor who already has no understanding of metalworking as a hobby. Just report your miscellaneous income as general consulting income and be done with it.

========= The problem is that this consumption tax or VAT will be "in addition to" rather than "in place of" the existing tax structure. Also we already have state sales taxes at or near 10% in many areas, and real estate taxes over a few years can exceed the price of the home [excluding interest].

Another area that should be considered is a capital levy on total net worth for high income/high worth individuals no matter where their wealth is located nor what form it is in. This would partially avoid tax dodging, cheating, avoidance and evasion. IIRC Denmark has a 1% capital levy on personal assets above a certain limit in addition to the usual VAT, income, auto, etc. etc. taxes. Anybody on the group from Denmark that can tell us how this is working?

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

In PA if your are a manufacturer everything directly used in the process of manufacturing is tax exempt.

John

I think that tax authorities would have a hard time proving that business equipment and repairs thereof, is not for business, PROVIDED that the business is profitable. A non-profitable busniess may be classified as a hobby. But as long as you turn up a profit, I think that writing off business equipment is what the tax system is designed for.