shameless, it's all about getting LOTS of YOUR money, constantly.

If 'they' sold you  the perfect small tractor to pull the perfct small implements, you'd buy just ONE tractor and implement in your lifetime for your 500 acres. Done, no more sales for them, they go outta business.

Same as 'puters. I've not bought a new PC in maybe 4 decades,over 3.5 for SURE.Run  old softwares,the equipment does what's needed for me,NO reason to 'upgrade', none.

The ONLY way any company survives and thrives is to KEEP selling you their 'stuff'.

That's great!  IF you have 5 people around that can do something useful on a tractor!  

Eh...I think this philosophy, while true and useful if done in proper balance, is OVER DONE by a lot of people, and they get in trouble.

Difference between an "expense", entire amount of money gets deducted from the income in the tax year it's expended; and capital where you're only allowed to deduct a fraction per year on a depreciation schedule.  

Farmers seem famous (at least the ones I know around here) for not wanting to pay a dime in taxes, because it isn't "fair", and while they often pay some tax, paying less and less is the driving goal.  If a person gets a paycheck, the taxes get taken out, you have no choice.  

One strategy to avoid tax is to lease equipment.  This is an expense and not a capital asset.  Good news/ bad news.  Good news, the whole dollar amount is deducted, bad news is, you don't have that item of worth on your inventory balance sheet.  

The other option, keep buying equipment to keep your depreciation deductions up to offset income to reduce taxes.  Trouble is, if you abuse this strategy, it runs away on you, and you're left with a mountain of debt.  Seems...and this is where I start running out of understanding,.....let's say you're on a simple 10 year straight line depreciation schedule.  So you "only" deduct 10% of your equipment purchase.  You borrow/buy more and more to get that dollar amount higher.  Seems some guys end up spending that 10:1 ratio to get high deductions to offset the income to avoid tax.  

I get it to a point, but there comes a point where what's the difference if you pay money to the government or pay money to the bank?  What's so terrible about making $10, keeping $7 versus making $10 and spending $100?

Case in point.  "Huge" dairy farm nearby.  One of the guys graduated high school with my brother in law back in '81.  Brother in law would see him, "Hey, you just bought that thingy last year, now you have it parked, seems like you don't use it?"  Reply, "yeah, it really doesn't work very well, and we have xxx that does the same thing."  "Well then why did you buy it?"  Reply, "OH!  You have to!  Otherwise the taxes will kill you!"

That conversation was 8-10 years ago.  The farm is for sale, not selling.  Why?  $9,000,000 debt!  How does it make sense to have that much debt on a 3,4 generation farm???

Tbone, the real dagger on tax write offs is accelerated depreciation on financed equipment.  Many many farmers and other small businesses fall into the trap.   Farmers fall into the trap more often because their biggest capital purchases are not deductible.

What I mean is say you make $100,000 principle land payment with profits of $125,000, now you owe $30,000 taxes on the $100,000 payment but only have $25,000.  Your accountant says you can save $30,000 on taxes if you spend $100,000 and it lowers your tax bracket and saves another $10,000 so you take the $25,000 and use it for a down payment on a $110,000 combine, and write off all but the $10,000 residual value and now have $10,000 in your pocket.  Sounds pretty good!!  Well until the next year when your $100,000 land payment is still not deductible and now your $18,000 combine payment isn't deductible.  So now you owe taxes on $118,000 and have $7,000 left over. 

Accountants are there to save people tax money not make financial decisions for them and too many people let their accountants make financial decisions that end bad.  There always needs to be a balance of cash flow and taxes paid and my rule that you never write off a entire equipment purchase unless you paid cash for it, if you put half down then write off half etc.