Can you sell equipment you previously owned prior to the LCO back to the business?

Discussion in 'Business Operations' started by jasonnau, Dec 1, 2005.

  1. jasonnau

    jasonnau LawnSite Senior Member
    Messages: 454

    Just curious if I could get some serious write off's this year by selling the tools and equipment that I purchased prior to being an lco back to the business. Prior to being an official lco, I had started purchasing tools and equipment for "side Jobs". Now this stuff is officially used for business. I've compiled a list of all of the stuff inculding this computer and totaled up almost $5,000 worth of stuff that I use regularly for business. I'm just not sure of a couple of things. First, what if I purchased stuff that has already run it's term and been heaped to the parts pile. It was worn out by the business and purchased prior. Also, do you need to depreciate, or is it worth it's original value. I don't want to raise any red flags, but, I would like to know the basics about this stuff and get my share of the pot. This is the end of my second season, and I don't have the write offs that I did in the first season. At this point uncle sam has both his hands out holding a pillow case.
  2. cantoo

    cantoo LawnSite Silver Member
    Messages: 2,910

    I don't think you can do that here unless you do it when you start the business. What I did was sell most of the stuff I had before and bought new stuff so that I would have legitimate write offs and no questions asked. We continue to buy and sell stuff so that we can write off as needed. I also sell worn out stuff from my business to my son so he can fix or patch it up to sell for himself to make money.
  3. Bulletproof

    Bulletproof LawnSite Member
    Messages: 155

    Get a certified Accountant (CA,CMA). They know all the tricks and they will cost you a bit, but it is definetly worth it. They will presumably help you avoid red-flags which is definetly the point.

    Seriously, first year of business used a book-keeper... worst decision ever. Useless...And I've heard this about others not just the one we used.
  4. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Messages: 1,847

    if you are a sole prop, then it really doesnt matter. You will show a cash inflow (taxable income) personally and receive a tax deduction on the business side. It will all even out in this situation.

    Corp or LLC will be different than above and may prove worthwhile.

    However, you personally can go back and file amended tax returns to claim the equipment deductions (sec 179 to take full depreciation in one year). This will result in a tax refund from the money you already have paid in taxes in prevous years. I belive (double check) that you can amend returns for up to 5 years.
  5. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

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