Usually, the sale of a newly manufactured tractor triggers a 12% excise tax. But there’s a safe harbor when repairs or modifications to an existing tractor do not exceed 75% of the retail price of a comparable new tractor. An appellate court said a company that built and sold highway tractors by installing old engines and transmissions obtained from salvage years into otherwise new tractors met the safe harbor, so no excise tax. The case isn’t over for this company, but it demonstrates the importance of looking for exceptions, exemptions, and safe harbors to minimize or avoid a tax. #IdeaoftheDay
