Originally Posted by hackitdown
With the section 179 accelerated depreciation tax rule, does it make sense to buy a $10K mower every year? Or several mowers if you are a big operator?
Say you buy a mower for $10K, reducing your taxable income by the full $10K by taking the full depreciation the first year, then theoretically sell it for $8K the next year. Do you pay capital gains on the $8K? Even so, would it be better to pay only 20% capital gains on $8K ($1600) instead of 30% income tax/soc security/medicare taxes on $10K ($3000)? Is that how it works? Do guys cheat and not report the $8K sale of the asset (mower)?
Or maybe you buy a truck every year for $35K, and sell the old one.
Is anyone doing this section 179 stuff?
Most people have no clue that they're supposed to pay taxes on Recovery. Recovery is treated as income and not capital gains.