Tax Question - "How much time do I have to write this off?" (1 Viewer)

[Ross Williams]

I'm a filmmaker, and I plan on buying fairly expensive camera in the very near future. Eventually I plan on starting my own business. Somebody has told me that I can make purchases now, with the plan of writing them off when I open my business. Is this true? How much time do I have to do this?

Any tax experts or business owners out there that can answer this question?

Thanks in advance!

 

[Ross Williams]

Anyone?

 

[Jeff Detiege]

Ross,

Below is a quote from an internet search for "new business tax write off". When you start a new business, it is important to keep your personal finances seperate from your business finances. You can't buy something for personal use then decide to give it to the business without considering credit/debit revenue. Business taxes are very different from personal taxes. If you buy this year but don't start your business until next year, the depreciation will be different. Do yourself a favor, start your business before you buy anything of significant value. A business license and fictitious name statement aren't that expensive.


"Businesses received a new tax break from the economic stimulus package recently signed by President Bush. Under the new law, businesses can write off the cost of certain new equipment purchases and property improvements more quickly than previously allowed.

When you buy machinery or equipment for your business, you can write off or depreciate the cost over the useful life of the asset. There's also a special tax break, called the Section 179 deduction, that allows small businesses to write off a certain amount of equipment costs in the year of purchase. Now the new law adds another option for businesses called "bonus" depreciation.

Take "bonus" depreciation. The new 30% bonus depreciation provision applies to most office furniture and software, most machinery and equipment purchases, and certain property improvements placed in service after September 10, 2001, and before September 11, 2004. Only new (not used) property is eligible for bonus depreciation.

Here's an example: Say you bought a new $100,000 machine on October 15, 2001. You can write off $30,000 (30% of the cost) in 2001. This is in addition to any Section 179 depreciation taken and the regular first-year depreciation deduction. If you're in the 30.5% tax bracket for 2001, the bonus depreciation will reduce your taxes by $9,150."