Equipment depreciation

Discussion in 'Lawn Mowing' started by SJR Lawncare, Dec 18, 2000.

  1. SJR Lawncare

    SJR Lawncare LawnSite Senior Member
    Messages: 250

    How do you figure depreciation on equipment? Is there a book or guide for this? tax time is coming soon & I want to be prepared because this year has been good to me, and I was able to buy some new equipment that I guess I want to use its depreciation for a few years. Any help will be greatly appreciated.
  2. Greenkeepers

    Greenkeepers LawnSite Senior Member
    from NE Ohio
    Messages: 695


    Go to your favorite browser and do a search for depreciation . You should get a bunch of schedules for MACRS, Straight-Line, Double Declining Balance. You take the amount of your purchase and multiply it by the factor from the table to get your expense for the year.
  3. Getmow

    Getmow LawnSite Senior Member
    from VA
    Messages: 445

    You can write off up to $18k (i think) per year on equipment purchases. Use the most you can.
  4. landscaper3

    landscaper3 LawnSite Bronze Member
    Messages: 1,354

    Lease and you can write off 100% of all payments at years end on a A.G. lease like the ones from your biggest money savings. We use to do depreciation and did research on leasing and found out how much money we would save and now only lease.
  5. jay

    jay LawnSite Member
    Messages: 133

    I have a accountant that I pay a 100$ at the end of the year and handles all my taxes and investments and wives wages. He depreciates my truck and equipment for me. He says I can do it eiether two ways I can depreciate all my equipment at once or each one over a period of three years 1/3 at a time. When I started up he depreciated it over three years since my gross was real low. Now I usually depreciate it usally on a yearly basis since I replace them quite often and my gross is much higher.
  6. Premo Services

    Premo Services LawnSite Bronze Member
    Messages: 1,516

    I think the best way to go would be an accountant. I have a great accountant and he advises me on the different ways to depreciate equiptment. During the year if I am going to purchase equipt. I call him and he figures out different ways to go,then he advises me and I decide to buy,lease on a estimate on how much I will make that year. This has worked out really great,and he is a very good accountant
  7. SJR Lawncare

    SJR Lawncare LawnSite Senior Member
    Messages: 250

    Thanks for the info guys, its been helpful. I think in the future it may be best to lease. I have a "highly recommended" accountant to see about all of this.

  8. morturf

    morturf LawnSite Senior Member
    from midwest
    Messages: 476

    There are a myriad of rules the IRS has on deprecciation. The few basic ones being that you can write off up to 18K per year but on all depreciable purchases. But any left over must be depreciated at a rate set by the IRS.

    Example: 25K pickup. even though u finanace it you must depreciate it at a five yr life span. The life span is set by the govt. there are two ways to do it.

    1. Is to put as much as possible in sec. 179 ($18k) and the balance ($5k)depreciates over 5 years. You get to choose the method (straight line, ddb, whatever).

    2. Depreciate the whole truck over the 5 yrs. again with method up to you.

    Here is the catch, if you sell (not trade) the truck before the 5 yrs. and you get more than the balance of what the truck is worth on your depr. schedule you must pay capital gain on the difference. If you trade there is no big deal as the differece on the trade and the difference on the depr schedule is now reconciled and that is the new balance to depreciate.

    The IRS has depr. schedules for everything you can imagine. Some amaze me. I own a building that needed a new roof, it leaked, i put on a whole new roof. The IRS said that i have to depreciate the roof over 31.5 yrs. i could not put it on sec 179, it does not qualify. Ok now, this is why I said the whole roof. If I had replaced half the roof, called it a repair and then done the rest the next year calling it a repair also it could have come off each year in total. I doubt the roof will last 31.5 yrs and then i will remember the idiotic rule and just repair it. But I will still be depreciating the old one till it is out. Does this make sense? Don't forget the computer, IRS says 5 yr depr schedule. How many of you have had a computer that lasted 5 yrs. I guess i have one but it won't run any new programs. Those get sec 179.

    Sorry this got so long, I am not a tax expert or a CPA, but I did stay at a Holiday Inn Express last nite!!!!! I

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