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G. Ramey
12-09-2010, 01:54 PM
I received an email from Wright that claimed I could completely write of the cost of a new mower on my 2010 taxes by useing section 179 on my returns. I Googled section 179 and read about it, but I want to hear someone elses interpretation of it. Has anyone used section 179 tax deduction before?:confused:

T.E.
12-09-2010, 02:47 PM
I received an email from Wright that claimed I could completely write of the cost of a new mower on my 2010 taxes by useing section 179 on my returns. I Googled section 179 and read about it, but I want to hear someone elses interpretation of it. Has anyone used section 179 tax deduction before?:confused:

Yes I've used the deduction. It takes the whole amount of the purchase in one tax yr, instead of depreciation over several yrs. Two things....1) can't create a loss with it. 2) You will have nothing to deduct the next tax yr as far as that piece of equipment.

Hope this helps.

Richard Martin
12-09-2010, 04:40 PM
I've been doing it since they implemented it.

grassman177
12-09-2010, 07:25 PM
we do it and use it to our advatage and replace something every year. so far so good, and we keep upgrading our equipment this way too so we have fewer breakdowns.

talk to an accountant and or tax person to find that sweet spot for your business and spend it my man!

KS_Grasscutter
12-09-2010, 08:13 PM
Yep, use it here too.
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topsites
12-09-2010, 09:09 PM
It's a business expense, hence it is tax deductible.

domain311
12-11-2010, 11:58 PM
Man what have I been missing? I need a new accountant I think... I just bought 2 mowers, but financed them...still possible to use 100%? If so, that's pretty damn exciting and those things just cost me a lot less...

daveyo
12-12-2010, 12:35 AM
Man what have I been missing? I need a new accountant I think... I just bought 2 mowers, but financed them...still possible to use 100%? If so, that's pretty damn exciting and those things just cost me a lot less...

You definitely need another accountant. Two things that are extremely important accountant and bookkeeper.

You can't write off 100% of something you haven't paid for, talk to another accountant.

Remember there are two types of accountants number crunchers and tax advisers go with the latter.

domain311
12-12-2010, 01:51 AM
You definitely need another accountant. Two things that are extremely important accountant and bookkeeper.

You can't write off 100% of something you haven't paid for, talk to another accountant. That's what I figured originally, so how does it work?
Remember there are two types of accountants number crunchers and tax advisers go with the latter. Makes sense...good point.

Thanks for your input.

dhardin53
12-12-2010, 01:54 AM
Its different for everyone. But for me I like my income and expenses to average out and flow from year to year. If you take all the cost of a new say $9000 mower within one year it has the potential to end the year looking like you lost money or have a dip in your income in the eyes of the IRS. Hench a red flag. If you spread it out over 5 to 7 years major purchases will not drastically affect your reportable income and expenses. The only true down side for extending your new purchases is if or when you dissolve your business. You will be hit hard when you close out that years taxes for all unfinished amortization.

domain311
12-12-2010, 02:08 AM
You definitely need another accountant. Two things that are extremely important accountant and bookkeeper.

You can't write off 100% of something you haven't paid for, talk to another accountant.

Remember there are two types of accountants number crunchers and tax advisers go with the latter.

Actually, from what I interpret here- http://www.businessmanagementdaily.com/articles/23288/1/Need-new-equipment-Finance-Section-179-assets-to-the-hilt/Page1.html#

...and a few other articles I've found, it seems you can deduct 100%, even if financed...unless I am missing something?

domain311
12-12-2010, 02:28 AM
Actually, from what I interpret here- http://www.businessmanagementdaily.com/articles/23288/1/Need-new-equipment-Finance-Section-179-assets-to-the-hilt/Page1.html#

...and a few other articles I've found, it seems you can deduct 100%, even if financed...unless I am missing something?


Here also.... http://knol.google.com/k/section-179-deductions#Section_179_combined_with_Equipment_Financing_and_Equipment_Leasing

Richard Martin
12-12-2010, 05:28 AM
If you take all the cost of a new say $9000 mower within one year it has the potential to end the year looking like you lost money or have a dip in your income in the eyes of the IRS. Hench a red flag. If you spread it out over 5 to 7 years major purchases will not drastically affect your reportable income and expenses.

Even if it were to trigger a red flag and you get a quicky internal IRS audit done (a person never even knows it happens when they do one, it's an internal IRS thing) they would quickly see the Setion 179 deduction and put it back in the "done" pile. Using the Section 179 deduction does not trigger audits.

DA Quality Lawn & YS
12-12-2010, 12:03 PM
Careful with the 179. If you dispose of the equipment before the depreciation life is up, you will have to add back in the remainder on your taxes.

Also, I wanted to know, would the 179 also apply to a business use pickup truck purchased?

mag360
12-12-2010, 01:59 PM
Domain - yes, you can take the full deduction for financed equipment. And you can deduct the interest on the loan as you pay it.

DA Quality Lawn & YS - Yes, sect 179 applies to a pickup truck. It even applies to a car used for business if you letter it up in such a way as to be unsuitable for personal use.

And yes - you must still track depreciation over the usable life of the machine or vehicle in case you sell before fully depreciated (you have to sell for, or pay taxes on, the depreciated value) and, once fully depreciated, you must report as profit any proceeds from the sale of the property. Section 179 is kind of a tax loan...

Patriot Services
12-12-2010, 02:15 PM
To answer the depreciation question it is devalued 20% per year for 5 years.
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domain311
12-12-2010, 02:49 PM
Domain - yes, you can take the full deduction for financed equipment. And you can deduct the interest on the loan as you pay it.

DA Quality Lawn & YS - Yes, sect 179 applies to a pickup truck. It even applies to a car used for business if you letter it up in such a way as to be unsuitable for personal use.

And yes - you must still track depreciation over the usable life of the machine or vehicle in case you sell before fully depreciated (you have to sell for, or pay taxes on, the depreciated value) and, once fully depreciated, you must report as profit any proceeds from the sale of the property. Section 179 is kind of a tax loan...

Great, thanks for confirming. We could really use it this year so this is good news for us. We should have about 35k or so that we can write off...and for example, if someone is in a 35% tax bracket, this equates to a rough tax savings of $12,250.00?

ed2hess
12-12-2010, 06:10 PM
Its different for everyone. But for me I like my income and expenses to average out and flow from year to year. If you take all the cost of a new say $9000 mower within one year it has the potential to end the year looking like you lost money or have a dip in your income in the eyes of the IRS. Hench a red flag. If you spread it out over 5 to 7 years major purchases will not drastically affect your reportable income and expenses. The only true down side for extending your new purchases is if or when you dissolve your business. You will be hit hard when you close out that years taxes for all unfinished amortization.

And......it is better to take a tax exemption when it is play rather than
assuming it will still be there in years to come. Nothing wrong with showing a loss if the business is being run on the up and up.

hoyboy
12-12-2010, 06:50 PM
[QUOTE=daveyo;3820529]

You can't write off 100% of something you haven't paid for, talk to another accountant.

[/QUOTE}

Actually you can...financing does not effect the 179 deduction.

topsites
12-12-2010, 07:39 PM
Taking the entire 100% depreciation in the first year is not a sound financial decision, and before the
usual wise guy has something to say I am going to suggest to some of you folks that you write up a
business plan before going into business and if you're already in business and haven't done so, perhaps
now would be a good time as well.

You really need to have these things thought out, planned out, and on the ready, it is one thing to ask a question,
but to get answers that actually suggest, and in turn taking that answer as the golden rule is a whole another story,
if you are new that's fine but be advised that the members of this forum aren't always interested in your well-being,
and yes that would include me so I just thought I'd give fair warning.

Have a nice day

mag360
12-13-2010, 01:39 AM
Great, thanks for confirming. We could really use it this year so this is good news for us. We should have about 35k or so that we can write off...and for example, if someone is in a 35% tax bracket, this equates to a rough tax savings of $12,250.00?

Even more if you pay self employment taxes (sole prop or llc not filing as s-corp would save an additional $5355 plus any state tax savings - although your state may not allow the full deduction). This is essentially a loan though. Remember that you can't write off the principle on your loan payments so you will be paying taxes next year on money you don't get to keep. For a growing company though, it is essentially an interest free loan that you can reinvest - unless it drops you down a tax bracket - then there are benefits to spreading it out over a few years...

ted putnam
12-13-2010, 10:27 AM
Even more if you pay self employment taxes (sole prop or llc not filing as s-corp would save an additional $5355 plus any state tax savings - although your state may not allow the full deduction). This is essentially a loan though. Remember that you can't write off the principle on your loan payments so you will be paying taxes next year on money you don't get to keep. For a growing company though, it is essentially an interest free loan that you can reinvest - unless it drops you down a tax bracket - then there are benefits to spreading it out over a few years...

I started as a DBA, then I incorporated. While in that transition I changed tax professionals. The first was a "number cruncher". The replacement( and still taking care of me 4 yrs later) was a "tax advisor". The numbers cruncher screwed me with what must have been a "179". I paid for it big time on the next years taxes(which were taken care of by the "tax advisor"). I am the type that purchases a piece of equipment and keeps it for the full life of the equipment so I am not buying/replacing equipment each year. This may have something to do with that disaster. However, my present tax person is the tax professional, not me. They "advised " against anything like the "179", at least for me...

hoyboy
12-14-2010, 10:20 PM
Taking the entire 100% depreciation in the first year is not a sound financial decision

Have a nice day


I really can't think of any scenario where this would be true. Wouldn't you rather have the money in your hands, for as long as possible, rather than in the IRS' hands, even if it is only temporary? The longer that money is in my hands, earning a return of some sort, the better off I am. True, future deductions will be less, but that is just a timing and budgeting issue.

This "free loan to the IRS" logic is very similiar to empoyee's making large payroll deductions just so they can get a large tax refund at the end of the year. You are effectively handing the IRS an interest-free loan. It makes no sense! Take the deduction!

Dan

snomaha
12-14-2010, 10:33 PM
I really can't think of any scenario where this would be true. Wouldn't you rather have the money in your hands, for as long as possible, rather than in the IRS' hands, even if it is only temporary? The longer that money is in my hands, earning a return of some sort, the better off I am. True, future deductions will be less, but that is just a timing and budgeting issue.

This "free loan to the IRS" logic is very similiar to empoyee's making large payroll deductions just so they can get a large tax refund at the end of the year. You are effectively handing the IRS an interest-free loan. It makes no sense! Take the deduction!

Dan

If you are a growing company you run the risk of taking the tax deduction at a lower tax rate then if you spread it out over multiple years.

FCPWLLC
12-19-2010, 12:07 PM
I take the 179 on every pressure washer we buy. They don't last long enough to benefit from depreciation. I am "out" the money in that year, I want the deduction that year, not 6 years from now.

DA Quality Lawn & YS
12-19-2010, 12:44 PM
Agree. Most items take the 179, unless it is a very large purchase and you want to have some tax benefit in future years OR you plan to dispose of a large purchase before the depreciation life is up.

Small items, makes no sense not to take the 179 in all cases.

Patriot Services
12-19-2010, 01:11 PM
All true. The only limit is a 179 deduction cannot be used to create a negative balance. It can be used to lower your tax bill right to zero but you cannot generate a refund with it.
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