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Posted by D. Stussy on May 13, 2008, 7:59 pm
Please log in for more thread options > removeps-groups@yahoo.com wrote:
> > wrote:
> >
> >>> What is the depreciation life of a dog?
> >> 7 years. Now here's the rub. To use section 179 to max out your
> >> deduction for total cost of dog, it must be used for year dog is
> >> placed in service. If you didn't file schedule c's for first several
> >> years, then you start to use depreciation for breeders in first year
> >> of schedule c use. Of course after business opens, any subsequent
> >> purchase of dogs gets the immediate write off.
> >
> > I'm confused. Say you purchase 2 dogs before business opens in
> > January 2006 for $7000. You are open for business on January 2007
> > because you are advertising. So on Schedule C for 2007, assuming you
> > use straight-line (SL) depreciation, do you:
> >
> > (a) Take $1000 depreciation for 2007 and each of the next 6 years.
> > (b) Write off the purchase of the dogs as a startup cost amortized
> > over 5 years, and take a depreciation of $1400 a year for 2007 and
> > each of the next 4 years.
> > (c) For 2006 depreciation would have been $1000 but you weren't open
> > for business, so in 2007 deduct the startup costs over 5 years, so in
> > 2007 and the next 4 years take $200 a year. In addition, take $1000 a
> > year for 2007 and the next 5 years.
> >
> >
> >> To use section 179 to max out your
> >> deduction for total cost of dog,
> >
> > Section 179 only accelerates your deduction. But no matter what
> > method you use, you still get the full deduction by the end of 7
> > years, so all methods max out the deduction. Is that right?
> >
> >> Of course after business opens, any subsequent
> >> purchase of dogs gets the immediate write off.
> >
> > I thought it has to be depreciated over 7 years (unless of course you
> > can and choose to use section 179).
> >
> Section 179 can only be used in the year you commence business (first
I hope that you meant that 179 can only be used in the year that the item
was BOTH purchased and placed into service.
> schedule c) or thereafter. thus if business begins Jan 1 2007, and dogs
> were bought previous year, you start in 2007 depreciating them for 7
> years, but under the MACRS system. See charts in the IRS publication
> for depreciation and you'll find you use a percentage of .1429 for the
> first year, other percentages for each of the 6 years thereafter.
>
> And yes, your depreciation and/or section 179 recovers the full cost(s)
> of de dawgs no matter which you use. It's just a matter of timing.
>
> For my client back when he was what I called him, a "dog farmer" (but no
> schedule f, mindyou!) I picked and chose whether or not to use section
> 179 for each year's purchases, depending on other factors, so as to
> smooth out his deductions over the years. Sometimes it's an art. (grin)
If the dogs were not purchased with the intent to start a breeding business
(i.e. it started "later"), then I have a problem with the whole thing.
There is no deduction for your PETS.
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