Taxes?

[mpgken]

This probably isn't the right forum for this and if not let me know and I'll post in the correct one.

Doing my taxes I have two dilemmas.

1) writing off my rv for mining purposes. There are many ways to do this and since I only use it for my mining business I am not sure what the best way is. I have read a lot and my head now hurts. Has anyone here done this and if so how? I am not looking for advice as to what I should do but trying to understand how others have done it.

2) using the depletion allowance. This sounds like a good thing but I am stuck on how to estimate how much gold is still in the ground. I have a placer mine and as with all mining gold isn't spread out evenly. If I test 100 spots the gold amounts can differ greatly. Has anyone had any experience with this that they would like to share? Accountants don't seem to have much experience in this.

Thanks for any help with these that anyone is willing offer.
Ken

 

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[arizau]

Far from being an expert but....I don't think you can do that on personal income tax. If you were operating your mining as a business such as a LLC that would be a different story and tax accountants are familiar with the regulations for them and what you can and cannot do as far as deductions.

 

[Jason in Enid]

Any time you want to begin deducting equipment expenses, against income you better be doing it as a business and I highly recommend hiring a professional for that level. Can you do it on your own, sure. but if your filing is outside their parameters, you will be automatically flagged for an audit (even if you did it correctly).

seriously, hire a tax professional or ignore it.

 

[mpgken]

Thanks but I have run many successful businesses and taxes aren't a big deal. I am not worried about an audit. Nothing I do is illegal. I follow the IRS rules. I am running my mining as a business and that is why I asked. I know there are others on here that mine as a business.

A depletion allowance is not outside their parameters. Big mining companies and oil companies use this all the time. It is in the tax code for a reason. Writing off an rv for business purposes is not outside the parameters. There are several ways to do it legally. I am not looking for advice but just wondering how others may have done it to get an idea of which way may be best. Tax 'professionals' don't always know things.

Anyone who has had experience with these? I would appreciate your input. Thanks

 

[smokeythecat]

Not with an RV. I have an LLC for a rental property and I guarantee you I have a CPA do the taxes every year. You DO need a business (I don't know if you have one or not), or you are engaging in a hobby. Taking a loss on a hobby does not work.

 

[OreCart]

It is a long term asset so it is treated no different then any other capital cost. You could either depreciate it over time (5 years I think), or take a one time deduction through Section 179.

 

[AnnaMountain]

The best way I’ve found to structure mining business is to have 1 C-corp and 1 LLC. The C-Corp is the management entity for the LLC. The LLC has expenses that get written off related to the mining business, and the C-Corp has expenses it writes off for the management portions. I pay myself through the management company - who is hired by the LLC.

What this does is allow you to “forward” any tax liability you have in the LLC, over to the management company in fees - giving you very little tax liability in the LLC. Each company has its own fiscal year end - so you can keep rotating the money through the two companies as long as you’d like - delaying your payment of taxes. Notice I said delaying - you’re not going to get out of paying taxes - you’re just able to re-invest the money for as long as you’d like, until you’re ready to pay the taxes.

It’s a great way to re-invest in yourself each year without getting a loan...waiting until you’re sitting on enough ore to cash-in, pay off the taxes every few years, etc.

 

[Clay Diggins]

You need to perfect your claim before you can take the depletion allowance. You can't calculate the depletion if you don't know the size, value, extent, cost of mining, processing and marketing of the deposit you are working.

For a placer deposit this guide Placer Examination, Principles and Practice can give you a good start. It's the one the government uses to determine the value of your deposit.

Heavy Pans

 

[Goldwasher]

if you sell gold you dig.. just include it in your income tax and be done with it...

Or sell it to a guy named John that doesn't like paperwork.

there are simpler ways.

Honestly if you mining Co. isn't generating 60k net... what are you writing off...what is your company?

A hobby is a biz that doesn't profit it takes a few years to reach that if you do it as a biz... however you can have a hobby that puts money in your pocket.