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Tax right-off question

Discussion in 'Business Operations' started by JayD, Jan 3, 2008.

  1. JayD

    JayD LawnSite Silver Member
    Posts: 2,060

    I need help with this question.....please.

    When you go to have your taxes done for the business, and your putting together all of your receipts, Lets say you buy a new mower for 10,000, you have invoice showing what you paid for it but you make payments on it each month. Do you claim the whole amount of purchase price, or just what you actually paid on it for the year?
  2. vanguard

    vanguard LawnSite Member
    Posts: 202

    Check with your accountant!

    Mine depreciates a percentage every year on my equipment. It's all smoke and mirrors to me, but that's what she gets paid for. payup :dizzy:
  3. JayD

    JayD LawnSite Silver Member
    Posts: 2,060

    Yeah, I remember her saying something about that a while back, I'll just call her. I was just trying to get paper work all up and ready for her when I thought of this. Thought that some one could answer it before I call her.
    But thanks.
  4. Rayholio

    Rayholio LawnSite Bronze Member
    Posts: 1,461

    you have options.. depending on the philosophy of your accountant, you can either claim it ALL this year as a deduction.. or you can depreciate it over the next several years.. and thus claim a % of it each year..

    This year I took all of the deductions I could get. as of january, I'm an LLC filing as an s corp.. and I'll be only paying social security(15%) on $12,000 next year.... as opposed to my sole propriotership this year, where every penny of profit is taxed that 15%.....
  5. olive123

    olive123 LawnSite Senior Member
    Posts: 500

    i believe you can take the depreciation over the next 7 years. That helps a lot year by year. BUT depending on which way you do it, depreciation vs one time,
    you have to claim when you sell it. Its similar to you business vehicle you claim gas, oil etc. I believe its the way to go with all equiptment
  6. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,056

    Rayholio and Olive are correct as whatever you buy on the particular tax year will only be shown on that year but you can depreciate it out. If you want to reduce your income significatly you can write it all off on the same year...but remember that you will have to do someting else next year as you may need more, which means you may want to buy something else! It is a viscious cycle if you ask me! :dizzy: But tons of fun!
  7. lawnservice

    lawnservice LawnSite Senior Member
    Posts: 589

    must of us are constantly buying equipment. our business grows we need more equipment. We're in business a few years we need to replace equipment.

    Because of my simple-mindedness I like the full deduction the year equipment is bought. Then the deduction of the cost of credit to pay for the equipment.

    but yeah, six of one, half dozen of the other

    but I will add this.....always keep in mind that your accountant works for you and not the other way around!
  8. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,056

    Here is the cycle:

    You want to work...so you buy equipment....now you have to grow so you can pay for the equipment....then you outgrow what you have so you get bigger equipment....so you have to grow to pay for that equipment....and on and on and on! Never ends!

    Viscious cycle if you ask me...but I sure aint complaining! :)
  9. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,839

    I think the "check with your accountant" comment is the right answer.

    There are different ways to write this off, as mentioned above. But only your accountant knows your personal situation and can advise what's best for you. If you don't already have a good CPA, I would highly encourage you to get one - NOW. Don't consider it something you can't afford. Consider it something you can't afford NOT to have.

    My CPA saves me thousands and usually tens of thousands every year. Worth every dime. Wish I would have began using one much earlier in my business.
  10. Earthworks Landscaping

    Earthworks Landscaping LawnSite Member
    Posts: 22

    If you are still making payments on your $10,000 mower, the IRS doesn't care if your making payments to an outside lender or the amount. You can depreciate the mower over the next seven years (agricultural machinery and equiptment) for the full price plus tax, shipping, frieight, dealer fee's, etc... Just take your total amount and divide by 7 years. In addition to your depreciation, you can also deduct the interest on your loan......

    Good Luck

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