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equipment depreciation

Discussion in 'Lawn Mowing' started by workinallthetime, Mar 4, 2007.

  1. workinallthetime

    workinallthetime LawnSite Member
    Posts: 105

    any EXPERIENCED lco's have a clue how to tell me to depreciate my equipment? tractors, mowers, trimmers ect.....?
    please dont say irs.gov. im new and trying to get all the weeds out of my business befor i start

    thank you !!!!!!!!!!!
  2. Raven386

    Raven386 LawnSite Silver Member
    from CT
    Posts: 2,160

    an Accountant would be able to answer all your questions.
  3. Scag48

    Scag48 LawnSite Fanatic
    Posts: 6,067

    Yeah, go see an accountant. I've taken 2 accounting classes in college and could probably roughly tell you how to set everything up, but everything is going to be a little different for different operations. Basically you need to decide how much, per month, it's costing you to replace the individual piece. This requires sitting down, figuring your service life, and finding out how many months the piece will be in service. But, you can't depreciate the entire price or you'd be winning both ways, the machine will never be worth $0, so you also need to figure out at what point, ballpark, the machine will be worth once it leaves service. Honestly, trimmers and stuff wouldn't be worth it, maybe you can group your 2 cycle equipment together and say that every 3 years you will replace the group as a whole, but mowers, trucks, anything large would be a necessity. Depreciation really isn't that difficult, everyone says it is, but it isn't. I would recommend speaking with an accountant though.
  4. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    If the purchase price is under $100k you can (and I do) write it off in the year it was purchased. Despite having an army of equipment I am currently depreciating nothing. Yes it's legal.
  5. David Grass

    David Grass LawnSite Senior Member
    Posts: 485

    yes, in order to spur the interest in buying "durable goods" or bigger ticket items, the gov. alows you to write it off immediately, just dont write off more than you made for the year, save the remainder for the next year. You could start a business like this, use very little start up capital (loans) and pay no taxes for several years. The gov. wants the economy to spur on, so this is good for us in biz. Understand, you dont have to pay the cash out, a loan for 30k worth of equipment is deductable right away. I think it is section 141 expensing.
  6. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    Yes, you can depreciate the whole total, to keep a tax bill lower.

    However, my accountant has advised me, basically depreciate it out, as to how long you're paying for it.

    For example.... if you pay cash for a $10,000 lawn mower, then depreciate it totally for the first year.

    If you're making payments, whether a mower, truck, whatever, then depreciate it out over the life of the payments.

    You can depreciate the total amount, but when you've totally depreciated it, then you have to pay tax on the amount that you get for selling it.

    Say you depreciate your mower to $0. Then when you sell it, you get $3,000. You have to pay capital gains on that $3000.

    If you depreciated it to $4000, and sold it for $3000, then you could take a loss against your taxes.
  7. lawncuttinfoo

    lawncuttinfoo LawnSite Bronze Member
    Posts: 1,010

    I think my tax guy Writes it all off as purchased then depreciates in addition, It just depends if you want to write off the repair costs, things that are depreciated have all the reapir costs built in so u can't say, write off 3 quarts of oil u are puting in a depreciating mower, however if u are not depreciating then the oil can be written off as a business expense.
  8. workinallthetime

    workinallthetime LawnSite Member
    Posts: 105

    hey thanks guys, i think an apointment with the accountant would be wise for me, but at least now i understand the operation. I will be depriciating aprox 25k in equipment and a 42k truck. i was hopeing that the lawn business will be able to depreciate the truck and tractor so i can take them out of the household bills plus depreciate the new mower and trimmer group
    thanks again
  9. jeffex

    jeffex LawnSite Bronze Member
    Posts: 1,933

    Richard martin is correct. I use turbo tax [just finished last thurs] and you can depreciate the whole ammount in the year you purchased if it is used 100% for business or over any number of years. Turbo tax is $40 and walks you right through it. Just fill in the numbers. section 179 depreciation and amortization of schedule c profit or loss from business
  10. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Posts: 2,513

    Someone please correct me if I'm mistaken but I believe this is incorrect. Depreciating equipment is just for the value of the equipment. Oil, service work, parts, etc. are all in addition to the depreciated value you get each year until the equipment is either sold, retired, or just "depreciated out".

    I also doubt being able to "Writes it all off as purchased then depreciates in addition". :)

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