Tithing: Take 2

[PacMan]

So what would you do? And why not something else?

[nicolasconnault]

So what would you do? And why not something else?

$25,000 is my choice. Explanation: business expenses must be taken out of your "yearly increase", simply because that's the nature of business. Some businesses actually run at a loss some years, so I'm not sure if you'd pay tithing on any of it, in that case... I would probably still pay tithing on the wages I give myself out of the business.

I didn't deduct the $150,000 taxes, because I consider that this money is not entirely lost. We receive many indirect benefits from taxes, even though we may disagree on how some of it is spent.

[PacMan]

$25,000 is my choice. Explanation: business expenses must be taken out of your "yearly increase", simply because that's the nature of business. Some businesses actually run at a loss some years, so I'm not sure if you'd pay tithing on any of it, in that case... I would probably still pay tithing on the wages I give myself out of the business.

I didn't deduct the $150,000 taxes, because I consider that this money is not entirely lost. We receive many indirect benefits from taxes, even though we may disagree on how some of it is spent.

There are no additional income/expenses to account for outside of this year.

What if after everything is taken out except $150,000 in taxes, you made $25,000? What then?

[bluebell]

I'd pay on the net income. The gross income, to me, doesn't count as 'increase' because, literally, it's not and it doesn't.

[Jeff K.]

How much income goes to your family and how much stays with the business?

Is the farm a corporation or an S Corp?

What is the income to the family versus the income to the farm?

Most farmers I know also pay themselves a salary, the rest of the money going into the business. So what is the farmers "salary"? If it is the labor costs, then that is the farmers income.

You seem to conflate a business with personal income. Which is different from personal expenses.

[Doctrine 612]

I would pay $15,000 from the $150,000 profit of the business

[PacMan]

How much income goes to your family and how much stays with the business?

Is the farm a corporation or an S Corp?

What is the income to the family versus the income to the farm?

Most farmers I know also pay themselves a salary, the rest of the money going into the business. So what is the farmers "salary"? If it is the labor costs, then that is the farmers income.

You seem to conflate a business with personal income. Which is different from personal expenses.

Jeff,

You're getting cute and it's going to sink you. I already stated it was a sole proprietorship, which means the tax is taxed at the personal taxation rate and all profits are personal income to the farmer. But even that's irrelevant, because the tax was a given as per the poll, as was the fact that all income was already provided for. And as if that's not enough, because it's a sole proprietorship, the "salary" issue is even further irrelevant.

I can now appreciate how you enjoy straining at a gnat. Your tendency is to get lost in irrelevant semantics is unfortunate, and not benign.

PacMan

[PacMan]

I would pay $15,000 from the $150,000 profit of the business

You're going to need to spell that out...

[nicolasconnault]

There are no additional income/expenses to account for outside of this year.

What if after everything is taken out except $150,000 in taxes, you made $25,000? What then?

Even without paying taxes that would hardly give me enough to live on. I would probably sell the farm and get a more secure job

[MorningStar]

I would pay $25,000 and that would leave me with $75,000 after taxes. Wouldn't all of those business expenses be write-offs though, decreasing the tax?

[nicolasconnault]

I would pay $25,000 and that would leave me with $75,000 after taxes. Wouldn't all of those business expenses be write-offs though, decreasing the tax?

I think you're right, you wouldn't be paying $150,000 taxes on $75,000 revenue... In fact you'd probably pay around $15,000 taxes.

[Nathair/|\]

There is a distinct absence of a "Jason option" in these tithing poles.

[MorningStar]

Let's see, 1 million minus 500,000 leaves you with 500,000. Subtract 250,000 and you're left with 250,000 to be taxed. What would that rate be? According to one article, I think it's 33%. That would be $82,500 in taxes. Subtract it from 250,000 and you have $167,500. Subtract $25,000 for tithing and you have $142,500 and I would LOVE to be in that position. Heck, I would throw in another $10,000 in fast offerings!

[nicolasconnault]

Please see my reply to poll #3

[charity's child]

I'd pay on the net income. The gross income, to me, doesn't count as 'increase' because, literally, it's not and it doesn't.

In a business situation, I'd count the net income as the part you pay taxes on, so the taxes would be included.

I pay taxes on my gross paycheck partly because then I don't have to figure out what the income after taxes and before deductions for health insurance or retirement contributions. It's easier that way.

[Jeff K.]

Jeff,

You're getting cute and it's going to sink you. I already stated it was a sole proprietorship, which means the tax is taxed at the personal taxation rate and all profits are personal income to the farmer. But even that's irrelevant, because the tax was a given as per the poll, as was the fact that all income was already provided for. And as if that's not enough, because it's a sole proprietorship, the "salary" issue is even further irrelevant.

I can now appreciate how you enjoy straining at a gnat. Your tendency is to get lost in irrelevant semantics is unfortunate, and not benign.

PacMan

Sigh, one thing I am not is cute. You simply show that you have no concept on business as you conflate personal family income with business. Believe it or not, even a sol proprietorship divides expenses between business and personal. Your example is filled with inconsistency and it does not apply.

I don't strain the gnat, in this case being you. I simply try to educate it.

[rpn]

I presumed that some portion of the 150,000 taxes were related to the labor and the busiiness half of the self-employment FICA/Medicare, which I would consider business expenses, leaving the 10% choice of more than 10K but less than 25K.

[ERayR]

So what would you do? And why not something else?

What kind of taxes? If it is property tax it is a cost of doing busines and would be a deduction. If it was income tax(the amount is totally wrong for that much income) it is not a cost of doing business. How much you pay tithing on is your decision. I pay tithing on what I am comfortable with, you must do the same.

[ERayR]

How much income goes to your family and how much stays with the business?

Is the farm a corporation or an S Corp?

What is the income to the family versus the income to the farm?

Most farmers I know also pay themselves a salary, the rest of the money going into the business. So what is the farmers "salary"? If it is the labor costs, then that is the farmers income.

You seem to conflate a business with personal income. Which is different from personal expenses.

The problem is that unless there is a corporation, partnership, etc the farm is the person for tax purposes and is reported on the persons tax return on a farm schedule. That would make the farm increase personal increase. In this scenario I find much more things much more problematic than the cash income. For instance if this is a livestock producer what do you do with the animals raised and kept to increase herd size? You have increased herd size.

[ERayR]

Let's see, 1 million minus 500,000 leaves you with 500,000. Subtract 250,000 and you're left with 250,000 to be taxed. What would that rate be? According to one article, I think it's 33%. That would be $82,500 in taxes. Subtract it from 250,000 and you have $167,500. Subtract $25,000 for tithing and you have $142,500 and I would LOVE to be in that position. Heck, I would throw in another $10,000 in fast offerings!

The problem with this is that its all hypothetical and the numbers do not come anywhere near being realistic. I have done the numbers on enough of these operations to understand why the wives of most small farmers have a job off the farm.

[Jeff K.]

The problem is that unless there is a corporation, partnership, etc the farm is the person for tax purposes and is reported on the persons tax return on a farm schedule. That would make the farm increase personal increase. In this scenario I find much more things much more problematic than the cash income. For instance if this is a livestock producer what do you do with the animals raised and kept to increase herd size? You have increased herd size.

You raise a good point. But I believe one could also view the situation from the standpoint of a division in costs that separate farm production from personal use when it comes to calculating taxes. Schedule F specifically allows for it.

[ERayR]

You raise a good point. But I believe one could also view the situation from the standpoint of a division in costs that separate farm production from personal use when it comes to calculating taxes. Schedule F specifically allows for it.

Schedule F is for calculating profit and loss. It is part of the personal tax return. All businesses that are not seperate entities (corporations etc) are personal income earned from a business venture. All income from the schedules on the personal return is combined on page 1 of the 1040. The schedules are for the purpose of combining and showing income and expenses to the IRS.

[Jeff K.]

I don't think you understand. You have to separate personal from business in order to allow for deductible expenses in running a business that you cannot deduct from personal tax exposure, things like mileage and investments in machinery. It has nothing to do with being incorporated or not since corporations already have the shield seperating business or pesonal, proprietorships will still need to separate the costs.

[ERayR]

I don't think you understand. You have to separate personal from business in order to allow for deductible expenses in running a business that you cannot deduct from personal tax exposure, things like mileage and investments in machinery. It has nothing to do with being incorporated or not since corporations already have the shield seperating business or pesonal, proprietorships will still need to separate the costs.

Either you are not expressing yourself well or you do not understand. I do this for a living. The Schedules C, D, E and F are what reports the operations of the business to the IRS. The results of the business or farm are reported on the schedules. It is then carried to the front of the taxpayers tax return and reported as personal income. The schedules mearly seperate and report the income for IRS reporting purposes and yes some expenses are personal and not deductable and some is but it is all personal income.

[PacMan]

Jeff K.,

So your rebuttal is that the seeding and equipment is a personal expense? No matter which way you look at it, you