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Court opinion:
A particular business has been operating since year 1902, first as a fruit-and-dairy farm, later as only a dairy farm, and now as a timber farm. It consists of 1100 acres (1.7 mi2, 450 ha, 4.5 km2).
In year 2018, the business pays 112 k$ for a used Mercedes-Benz G-Class SUV. It claims a sales-tax exemption since the vehicle will be used in farming. But in year 2020 the department of taxation disagrees and imposes a penalty. (1) The exemption requires that the business be engaged in farming. However, despite claiming to be a timber farm, this business has never actually sold any timber, and indeed has reported no sales, income, or labor expenses since year 2011. (2) The exemption requires that the vehicle be used directly in farming. However, this vehicle is used merely to transport people and equipment through the forest, not for a farming activity like plowing. (3) The exemption requires that the vehicle be used primarily in farming. However, the business failed to keep mileage logs as proof of how the vehicle was used, and even involved the vehicle in a minor crash outside a post office outside the forest. In year 2024, the board of tax appeals affirms.
In year 2025, the state supreme court reverses. (1) The business has implemented a forest-management plan and has spent thousands of dollars on hiring contractors to remove invasive species that can damage the trees. Since trees take decades to mature into harvestable timber, this is enough to show that appellant is engaged in farming even in the absence of much activity at the moment. (2) "Property may qualify as being used in farming even though it is used to perform an intermediate step in the process of producing crops." "Just as a tractor provides the means for conveying a plow through a field where it can act upon the ground, the vehicle in this case provides the means for conveying chainsaws, marking tools, herbicides, and workers through [appellant's] forest." And the word "directly" is not in the statute. (Wikipedia describes the G-Class as a luxury vehicle, but the business in this case testified that it combined the off-road capability of a Jeep Wrangler with the cargo capacity of a Chevrolet Silverado, and both of those properties were needed in the forest.) (3) Mileage logs are not required by the statute. The business testified that farm-related use of the vehicle was around 95 percent, and that testimony was not rebutted by the department of taxation, so it stands.
Insane they didn't fight on this point
How? There are no mileage logs or (AFAICT) hard evidence of another sort. It would be pure he-said-she-said where one party is literally and completely ignorant.
Yeah if there's no milage logs for the thing you are claiming to be a taxable expense then you get fucked and can't claim it as a taxable expense?
Putting aside the cartoonish scenario of "oh yeah we totally need the g-wagon for our tree farm", my understanding of tax law has always been you are guilty until proven innocent and they onus is on you to prove it.
If you don't do your homework, if you don't have logs, etc, you get fucked
I'm not saying I agree with this, I'm just saying I'm surprised the IRS didn't lean on this harder in court. They really need to have logs.
Like if you can just show up to court and say "but it's just he said she said so why even bother having logs your honor?" and then win, why does anyone keep logs for vehicles ever?
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