6 replies to this topic

[Norm]

Simple Question:

If I buy a Thompson SMG (or any other NFA weapon), I pay a $200 transfer tax.

Can this $200 be written off my federal income tax?

After all, it was tax paid to the federal government.

Norm

[Z3BigDaddy]

I'm going out on a limb and say no.... But if you find out otherwise, I got a shitload of money coming back on liquour tax stamps.....

[PK.]

It is generally accepted that the tax is not deductible.

The actual writing of the law stipulates that the tax is supposed to be paid by the seller, but we all know how that works.

[TactAdv]

Paul is correct, with one caveat: you did not say so, but if you are an individual, then NFA taxes per se are not identifiable on your return.
However, if you are filing with a Schedule C and can attach the NFA purchase as related to your business activity, then the money paid as NFA taxes are deductible as EXPENSES against profits, though this is NOT a tax CREDIT, just a simple expense. (*ALL* SOT payers should be listing *ALL* NFA taxes paid, including the SOT tax and a prorated portion of the FFL renewal fee, as deductible expenses.)
-TomH

PS-The NFA transfer tax is indeed a tax burden imposed upon the seller BY BATFE (not IRS), however as a simple business expense, if you can document it was money you paid in acquiring the item, then it is a quailifying expense.

[Norm]

Maybe I need a form 1921X to claim it!

Ok, no tax break on an individual transfer.

Is there anything in the 1934 NFA law that says that the government can never rasise the tax to say $500, or even $1,000?

Norm

[TactAdv]

"Is there anything in the 1934 NFA law that says that the government can never raise the tax to say $500, or even $1,000?"

-----------------------

Yes, as the rates were set by Congressional Act, they cannot be ammended without further visitation by Congress. The tax values selected in '34 was completely arbitrary in that the number chosen was selected not from any definable taxation basis, if it was it might have been written to include language relative to advancing the rates, but rather as the most onerous one likely to dissuade the further purchase of those weapons that were to be included in the new regulations, a 100% tax rate on the purchase price of the most visible weapon then being considered for inclusion, the Colt '21 TSMG. The rates are set.
For the sake of argument, there is nothing preventing >>Congress<< from the raising of the original NFA tax rates ($200.00, $5.00) but they would need to, essentially, Congressionally reauthorize the entire Act to do so......an unrealistic probabilty, politically. So an Administrative action by BATFE to raise rates will NOT happen.
-TomH

[Grey Crow]

Norm,

I requested a set of the 1921X forms, and I did receive them.

The problem is that it's awful difficult to read "white lettering" on white paper.