Equipment depreciation guidelines.

[TerryinMD]

It's that favorite time of year - tax season. Where we are the hunted instead of the hunters. /w3tcompact/icons/wink.gif

I have read the IRS guides in trying to figure out what I need to do to depreciate my equipment. Pages and pages of double speak and Enronese-like terms (read the stuff a few days ago and my head still hurts. /w3tcompact/icons/shocked.gif)

Do any of the TBN brain trust have some alternative sites, book references, etc to help or poor taxpayer try and figure out this mess.

Or should I throw in the towel and have someone do this for me?

Terry

 

[PaulinSD]

I depreciate my equipment over 5 years. The small $ items, like a $500 3 point mower, I take it as an expence. Saves a lot of worthless paperwork year after year.

Paul

 

[cowboydoc]

Terry,
Depending on the equipment you have to depreciate it out over 5-7 years. NOW THOUGH a little bit of good news. If you have a piece of equipment that you bought that is less than I believe around $18,000 you can take all of the deduction in the current tax year. Back before things got way too complicated I used to do all my own taxes. I found that the tax programs were invaluabe in doing my own taxes. Most had tutorials of depreciation and the like. I learned alot just from them. Also I used to get a book every year from American Express that was really good as well that went over all the tax issues.

 

[hayden]

Right, there's a provision for taking an accelerated one year depreciation up to a certain limit ($18k was suggested - I don't know the exact number) I did this with a portion of my equipment as used for timber management which is a for-profit operation.

 

[TerryinMD]

Paul/CBD/Hayden,

Thanks for the input. I'm using Taxcut and have not gotten that far into figuring any depreciation. Trying to get a basic understanding before jumping in head first. Read the IRS guidelines, my head tilted to one side, and the drool started to run... kinda went into a comatose state. /w3tcompact/icons/wink.gif So, I figured that a bunch of you guys have gone through this exercise and, well, just put forth a question and see what happens...

Again, thanks a bunch.

Terry

 

[cowboydoc]

Terry,
The other nice thing was the one that I used also went over my tax return at the end and told me where possible red flags for audits were as well. Does the one you're using take you step by step and give you options of doing it different ways to see the outcome?

 

[TerryinMD]

CBD,

Yes, Taxcut walks you through the tax preparation by asking questions. The next step is based upon the answers to questions. The software developers try to make the product easy to use, but sometimes do not provide good help information on esoteric and arcane accounting methodologies such as depreciation and expensing for businesses. We're new to the game and I want to make sure that our friendly IRS bureaucrats stay in their office and not knocking on my door. /w3tcompact/icons/blush.gif

I have used both TurboTax and Taxcut. Too be honest, the applications are very close in their approach on usability.

I used Turbotax/MacInTax for nearly 10 years before switching over to Taxcut. The reason - my wife. She got a free copy of the package and I decided what the heck. It did the job and was able to import my previous years TurboTax information.

Terry

 

[cowboydoc]

Terry,
A friend just sent me this. I guess it's $24k now in current year depreciation. I know this has to do with horses but it's all the same just different product.

Did you know that in the year 2001 you can expense off up to $24,000 of depreciable assets bought in the current year if you meet all of the criteria.
Read about this and other deductions in books from Davis Publishing. Check out our web-site at
www.horse-books.com to find out more.

Eileen Davis
Davis Publishing
Equine Author/Appraiser/Tax Consultant

 

[stmiller2]

Section 179 allows you to expense up to $24,000 of qualifying assets (equipment, etc.) for the 2001 tax year.

 

[TerryinMD]

Wow - this is getting better and better.... /w3tcompact/icons/smile.gif

Terry