From:  Brooke
Date:  Tue, 29 Jul 2003
Subject:  power tool tax

Dear Michael,

My family was going to start their own business until they received a phone call from a "tax man" who wanted to know all the power tools they had because they would have to pay a "luxury tax." Does this sound right? I can't find any information on luxury tax for power tools. Please help. I really appreciate it.

Thanks,

Brooke

Answer

Date:  Fri, 01 Aug 2003

Hello Brooke,

The federal luxury tax has expired and never did apply to power tools. It could be someone is getting sloppy with their terminology or there is a state (not California) luxury tax that applies. The tax that usually applies each year to tools used in a trade or business is the personal property tax. For details, consult with a local tax professional or call your county assessor's office.

Good luck!
Mike Gray

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