Tax question / free hardware
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@scottalanmiller said in Tax question / free hardware:
@Dashrender said in Tax question / free hardware:
@TAHIN said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
You are not familiar with use taxes? That's what you owe when you didn't pay sales tax on something.
"The use tax imposes a compensating tax equal in amount to the sales tax that would have been imposed on the sale of the property, if the sale had occurred within the state's taxing jurisdiction."
I thought use tax was imposed according to the state in which the product is being consumed. There's no sales tax in Montana, and therefore no use tax either. There is a small clause for sales and use tax, but that is limited to campgrounds/tourist stuff (go us lol).
Well, if you have no sales or use tax, then you probably don't have anything at all to worry about. What other kind of tax would you be subject to for accepting goods? Computers/servers/printers, and other typical IT related things aren't subject to property tax. I can't think of anything else you'd have to worry about.
I suppose someone could try to claim capital gains taxes? meh?
Any states not have those?
Not have what? Capital gains? I have no idea - but I'm not sure that capital gains count on sold goods that aren't the aforementioned home/building/vehicle.
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@Dashrender said in Tax question / free hardware:
@TAHIN said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
You are not familiar with use taxes? That's what you owe when you didn't pay sales tax on something.
"The use tax imposes a compensating tax equal in amount to the sales tax that would have been imposed on the sale of the property, if the sale had occurred within the state's taxing jurisdiction."
I thought use tax was imposed according to the state in which the product is being consumed. There's no sales tax in Montana, and therefore no use tax either. There is a small clause for sales and use tax, but that is limited to campgrounds/tourist stuff (go us lol).
Well, if you have no sales or use tax, then you probably don't have anything at all to worry about. What other kind of tax would you be subject to for accepting goods? Computers/servers/printers, and other typical IT related things aren't subject to property tax. I can't think of anything else you'd have to worry about.
I suppose someone could try to claim capital gains taxes? meh?
Actually they are subject to property tax as well as depreciation credits. With business all physical assets are taxable.
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@Jason said in Tax question / free hardware:
@Dashrender said in Tax question / free hardware:
@TAHIN said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
You are not familiar with use taxes? That's what you owe when you didn't pay sales tax on something.
"The use tax imposes a compensating tax equal in amount to the sales tax that would have been imposed on the sale of the property, if the sale had occurred within the state's taxing jurisdiction."
I thought use tax was imposed according to the state in which the product is being consumed. There's no sales tax in Montana, and therefore no use tax either. There is a small clause for sales and use tax, but that is limited to campgrounds/tourist stuff (go us lol).
Well, if you have no sales or use tax, then you probably don't have anything at all to worry about. What other kind of tax would you be subject to for accepting goods? Computers/servers/printers, and other typical IT related things aren't subject to property tax. I can't think of anything else you'd have to worry about.
I suppose someone could try to claim capital gains taxes? meh?
Actually they are subject to property tax as well as depreciation credits
Really? At what level do you have to pay property tax on IT equipment? I had 10K+ of server equipment in my house for years when I had my own business. My tax accountant knew full well about it and never once mentioned anything about property taxes on that equipment.
I'm pretty sure we don't pay property tax on car either, we pay sales of course, then Road and whatever other taxes are put on by your local municipality.
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@Jason said in Tax question / free hardware:
depreciation credits. With business all physical assets are taxable.
Now sure, you get depreciation credits, but that's based on what you paid (for goods). I.E. I buy a server for $5K, I get to depreciate that over 5-8 years. But if that server is given to me - what would I be depreciating against? Even better, I pay $100 for it, pretty sure I don't get to take depreciation against $5000, but I could be wrong.
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Depreciation is based on assested value not just purchase price. Donated assets are depreciated just the same
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What if the asset is treated like a "demo unit" that we will have until it's fully depreciated, at which point the vendor writes it off?
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@Dashrender said in Tax question / free hardware:
@Jason said in Tax question / free hardware:
depreciation credits. With business all physical assets are taxable.
Now sure, you get depreciation credits, but that's based on what you paid (for goods). I.E. I buy a server for $5K, I get to depreciate that over 5-8 years. But if that server is given to me - what would I be depreciating against? Even better, I pay $100 for it, pretty sure I don't get to take depreciation against $5000, but I could be wrong.
If you pay $100 to try to make something not a gift that was really a gift that's called tax fraud
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@scottalanmiller said in Tax question / free hardware:
If you pay $100 to try to make something not a gift that was really a gift that's called tax fraud
You mean... that's just us being "smart"?
haha, sorry, HAD to!
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What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
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@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
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@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
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@Dashrender said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
Yes, exactly. Businesses just gifting things does not make sense as that's not how businesses work. They need to make money, even if just a little. If they are claiming that the equipment is garbage and this is instead of throwing it out, they need to justify that.
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@scottalanmiller said in Tax question / free hardware:
@Dashrender said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
Yes, exactly. Businesses just gifting things does not make sense as that's not how businesses work. They need to make money, even if just a little. If they are claiming that the equipment is garbage and this is instead of throwing it out, they need to justify that.
Well, that can be pretty easy to do in today's world. Because if they can give something away, they do not have to pay a recycling firm.
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To shed some light on the 'business value' inquiry - this was a contest win. So the ROI on the sending end is advertising exposure.
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Can you spell out the entire situation? Right now we're just guessing in the dark.
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@TAHIN said in Tax question / free hardware:
To shed some light on the 'business value' inquiry - this was a contest win. So the ROI on the sending end is advertising exposure.
Oh that is not a gift. You will owe full taxes on that. That's payment.
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Sorry I can't get too wordy until we decide if we're going to accept. I'll update you soon.
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@TAHIN so you won that $60k HPE contest on SW?
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@TAHIN said in Tax question / free hardware:
Sorry I can't get too wordy until we decide if we're going to accept. I'll update you soon.
As @scottalanmiller said, prize winnings are income and taxes have to be paid on it.
This is famously known regarding the Price is Right prizes.
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@RojoLoco said in Tax question / free hardware:
@TAHIN so you won that $60k HPE contest on SW?
Affirmative. After a meeting with the CPA and receiving the green light, we are good to go. No taxes will be incurred. Don't ask me to explain it because I don't know how
