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Another tax question

Discussion in 'Business Operations' started by HOMER, Mar 11, 2001.

  1. HOMER

    HOMER LawnSite Gold Member
    Messages: 3,183

    When you purchase new equipment do you write it all off the first year or does your accountant depreciate it over a 3 year period? I need to do really good on my taxes this year and if it takes depreciating the full amount of the equipment I guess I will.
  2. Skookum

    Skookum LawnSite Senior Member
    Messages: 675

    I have always used the Line 179 deduction as a all write off as expenses for my equipment. If doing a lot of real big tax strategy or have so much then I can see the depreciation aspect. But I see it as I want my money now not later.
  3. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    Technically, you can only write off up to $10K in one year for equipment purchases..... or if each piece of equipment is under (I think) $5K total.

    Over $10K, you must depreciate it at least 3 years.

    And, if you list over $10K on that line, you will have inadvertantly given them revenuers a red flag to look at. Especially if you're signing your own tax return as the preparer.

    I am certainly no expert. I just sign all the forms when they are presented to me.
  4. HOMER

    HOMER LawnSite Gold Member
    Messages: 3,183

    Well now, we surely wouldn.t want to do that. I will ask my CPA and get the 411 on this before anything is done.
  5. Majestic

    Majestic LawnSite Member
    Messages: 42

    I think john is right.I liked the idea of writing it all in one year if possible but my accountant says no way.that will catch up with you as you grow.Unless you look at the BIG picture.Taxes-one month 3 days 15hrs and 41 minutes but whos keeping track right?

    OBRYANMAINT LawnSite Senior Member
    Messages: 555

    i take mine usually all in the first year,because of my growth i take as much as possible...although i weigh this with future slowdown and take larger purchases over a period of years trucks,this year i also have a skidloader which i will draw out over years....i think the limit is 20k though

  7. joshua

    joshua LawnSite Bronze Member
    Messages: 1,226

    homer, i bought my lazer last year and i got a loan for it, so i had the tax lady claim what i payed off on it. don't forget any reciep that you spend for gas, oil, trimmer line, and anything else. i have only paid a few hundred the past 2 years for taxes by claiming all this.
  8. BRL

    BRL LawnSite Bronze Member
    Messages: 1,211

    Check with your CPA's on this one because there is a change to that section of the tax code that takes effect now or is pending. The allowable deductions have increased, but I can't recall the numbers off hand.

    JA, are you still affected by this anyway, because I was under the assumption this was for small businesses & I would think you are no longer considered a small business? Do you know what that line is (small vs not small)?
  9. thelawnguy

    thelawnguy LawnSite Silver Member
    Messages: 2,411

    For 2000 the limit for write off is $20,000 total whether it be one piece of equipment or several. Anything more than that needs to be depreciated. If your business is in an enterprise zone the limit is higher.

    I usually expense whatever I can in the year its purchased vs depreciating it, the reasoning being that I will take whatever I can as early as I can, never know when the tax laws (or your situation) will change and leave you high and dry.
  10. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    Lawnguy.... thanks for that info. I wasn't aware that the law had changed.... sure hope my accountant knows it - but I'll ask anyway.

    BRL - I got a ways to go yet. Three years anyway I suspect. I believe the cut off is at $50M.

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