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Writing off my equipment

Discussion in 'Business Operations' started by 3sons, Mar 19, 2005.

  1. 3sons

    3sons LawnSite Member
    Messages: 41

    How exactly do you guys go about writing off your equipment. For instance, I have a Dodge Ram 1500 that I use for my business, can I write it off? What about my equipment? Do you use a simple straight line depriciation or something else?
  2. Bull

    Bull LawnSite Senior Member
    from NC
    Messages: 308

    Well I can tell you what I do but your situation may differ. I use Turbo Tax and in there it guides you through the process fairly simple. If you use the truck for both personal and business as I do then you have to keep track of the miles spent for each. Then you need to keep track of all of your cost associated with maintenance on the truck. Turbo Tax will calculate based on your input weather you would benefit the most from milage deductions or cost of up keep and fuel expenses. As for the depreciation you can do it over a number of years probably wouldn't want to go more than about three or you can do a one time write off in which you take the entire depreciation at once. Get ready though you will see a nice credit this year and the well will be dry next unless you purchase more equipment. And last but not least as some will tell you - Hire an Accountant.
  3. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Messages: 4,771

    You have your choice writing off vehicles...it can be depreciated over X amount of years or mileage (currently .37 per mile). If it's a new truck and you plan on selling and buying a new truck, depreciate it over the amount of years you plan on owning a vehicle. If it's an older vehicle and you plan on keeping it for awhile....then you might want to go with mileage. Once you decide on which route you want to take, you can no change it for the life of the vehicle. On equipment only depreciate it. In the past I have always deducted the total cost of the piece of equipment the first year. I did this for one main reason, I am part time and wanted to show no income. Don't take any advice here on this subject, better to talk with your accountant. My dad is a retired IRS auditor....I get all kinds of good advice.
  4. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    I keep it simple. I depreciate all new equipment as section 179 (depreciate the total cost in the year you buy it). For vehicles I use the mileage method.
  5. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Messages: 3,065

    3Sons get an accountant. One less thing to worry about.
  6. weedwoop

    weedwoop LawnSite Member
    Messages: 75

    I have kind of a related question. Once equipment has been long ago written off and you sell it, Do you show that money as income or can it just kind of disappear from the business. I think I know what the IRS would say but was wondering what the common practice is.
  7. mtdman

    mtdman LawnSite Gold Member
    Messages: 3,143

    Ditto that. Vehicles are part of the "listed items" that cannot be taken with section 179 deduction. For all non-listed items I just write it off quicky with 179.

  8. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    yup, the same with me
  9. lsylvain

    lsylvain LawnSite Senior Member
    Messages: 778

    1. When ever you sell any of your equipment you must include it as income or loss. If the item is fully depriciated you have to pay tax on the whole 9 yards.

    2. You guys must have small trucks if you arn't 179ing them. As long as the Gross weight is over 6500 or 6700 lbs (can't remember which) you can 179 them. A chevy 1500 4wd is over the weight limit. Even if it weights less than than you can still 179 them but their are caps to how much you can 179 based on different factors. This year is is about $10,000 you can 179.

    3. You should use 2 types of Dep the one that brings you the largest tax savings for tax purposes and the one that most accuratly shows the actual expensing of your assets as you use them up.

    If you get a new truck every 3 years use 3 years, if you run the truck till it has 100k miles use miles to write off the truck for bookkeeping purposes. This will show you how much it is really costing you to run your business.

    Hope this helps
  10. lawnlubber

    lawnlubber LawnSite Member
    Messages: 186

    When you dispose of an item you have claimed depreciation on you are supposed to pay a recapture tax on the sale. What if you drive your truck into the ground then junk it. There is no money so how do you report it, or does it just disappear.

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