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Taxes?

Discussion in 'Business Operations' started by MOturkey, Dec 26, 2012.

  1. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,741

    Hey, I know this is the wrong forum, but does anyone know if the rules for depreciation of new equipment purchased before the end of the year has changed any? In other words, can you still deduct the full amount of equipment purchased prior to January 1, like we have been able to do in the past? I've been plugging numbers into my tax forms (Turbo Tax), to see if it would warrant my buying a new leftover mower right now, rather than waiting until next spring, but TT says that section won't be ready until approximately January 10, because the IRS is still working on it.

    If I'm not mistaken, in prior years claiming the whole purchase price has been basically the same thing as that additional amount being listed as additional expenses. If that is true, it would pay me to buy now. If not, I will probably just wait until May, when the warranty on my oldest Z runs out. Thanks.
     
  2. Quix

    Quix LawnSite Member
    Posts: 74

    I am not positive what will happen. I gave my account my preliminary business info for her to review a couple weeks ago. She said my expenses were down, drought for sure. I mentioned I was thinking of an equipment purchase, wasn't sure if I wanted to do it this year or next. Her reply was that if I was going to make the purchase anyway to do it this year, that's where the Magna Matic came in.
    I don't think anyone knows for sure just yet. As no one knows what the heck our tax rate will be.
     
  3. DA Quality Lawn & YS

    DA Quality Lawn & YS LawnSite Fanatic
    Posts: 8,844

    As far as I know, you can still take the Sec. 179 deduction and expense out equipment purchases in full in the year purchased. Just remember if you sell the equipment before its depreciable life is up, you may end up owing some of the write off back on a future return.
     
  4. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    Section 179 has a maximum of $139,000 with a 50% depreciation above that in the first year up to $560,000. Section 179 drops to $25,000 next year with a 50% depreciation above that up to $200,000.
     
  5. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    I think Mr Martin is correct
     
  6. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    The AMT is going to hold everything up this year. The rules for 2012 have not been legislated yet and no one can write any software until that is done. Not even the IRS. If the patch isn't applied to the 2012 taxes then a whole lot of people (millions) will owe a mountain of taxes that they weren't expecting to.
     
  7. scotts lawn care

    scotts lawn care LawnSite Senior Member
    Posts: 476

    This is why I bought my new truck this month. I'm gonna need maybe half of it to 179 this year. I hope the tax laws don't change!

    My CPA has not said anything yet for changes. Not a bad idea to buy the equipment this month - if you need it.
     
  8. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    I heard the AMT is flawed, has been flawed but more so now than ever because of inflation or something.

    I am not sure about this Fiscal Cliff thing. I know it raises taxes on everyone but it also cuts spending.
     
  9. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    The basic figures have never been adjusted. Originally the law was intended to get more taxes out of high wage earners. At that time a high wage earner made about $33,000 a year. Here we are decades later and the average wage has risen to over $43,000. You can see the problem.
     
  10. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,741

    Thanks, Richard. That is the information I was looking for. I recalled reading there was to be a change, but wasn't sure when it went into effect, or if it totally eliminated the Section 179 depreciation. It is kind of a pain when you need to make a decision before the end of the year, but you can't run the numbers to make an educated one.
     

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