Taxpayer Not Entitled to Farm Machinery, Equipment Exemption
AR: Arkansas Appeals Office found the taxpayer was not entitled to Farm Machinery, Equipment Sales Tax Exemption. For farmers and ranchers to claim the agricultural property tax exemption, the land must be classified for agricultural use. The land must meet the minimum size, use, and location requirements. In addition, farming and ranching activities must be run as for-profit businesses and not for personal, noncommercial use.
The Department of Finance and Administration issued a gross tax receipts assessment against the taxpayer, a recognized for-profit entity. And this disallowed the farm equipment and machinery exemption. The taxpayer protested, stating that it wasn’t involved in for-profit farming even though its tax return showed a loss. In addition, the taxpayer failed to show how the farming equipment is used in farming activity.
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