tax write off (loan, insurance, licenses, CPA)

[og13window]

im starting up a business and im looking to buy a truck (s10) so i can haul inventory, this truck will be used solely for my business, can i write off the overall price for purchase and insurance before i get my tax ID # and licenses or do i have to wait?

[Driller1]

Originally Posted by og13window

im starting up a business and im looking to buy a truck (s10) so i can haul inventory, this truck will be used solely for my business, can i write off the overall price for purchase and insurance before i get my tax ID # and licenses or do i have to wait?

I use my SS number. The IRS has no interest in licenses, other than the deduction of the cost. Look your schedule "C" over.

[og13window]

yeah i looked over schedule C and it was simple jus a date when you claim the vehicle for you business, and the mileage. thanks for the info

[UpperPeninsulaRon]

Originally Posted by og13window

im starting up a business and im looking to buy a truck (s10) so i can haul inventory, this truck will be used solely for my business, can i write off the overall price for purchase and insurance before i get my tax ID # and licenses or do i have to wait?

You seem to be interested in the method of depreciating a vehicle on your books versus taking a mileage expense. You would show the total price as a long term asset, if you are purchasing with a loan that would show up as a long term note (liability), your interest would be categorized interest expense for P&L purposes, and your CPA will give you the depreciation method allowed in your particular case.

[StealthRabbit]

Or do a section 179 (accelerated depreciation), if your income is such that you qualify, and / or you would like the $$ up front. If your business (income) grows, you can later do a 1031 (like kind exchange) to upgrade from the S-10 to a Sprinter, then the box truck, and the semi. But... you cannot 1031 from the S-10 to a forklift (different class of equip). 1031's have to be done by an 'agent' (you can't touch the funds) but are good tools for tax planning. (the cost basis on your semi would be the basis brought forward from the S-10, so be careful if you sell the semi)

If you do a Sect 179, you will need to recapture the depreciation if you sell it before applicable period (entire life, if you took the whole amount up front). Same is true with std depreciation, but... the 179 is very nice to use in years with heavy tax burden (such as the year you get a severance package from former employer and start a new business, the following years will likely be bleak on the earning's front.)

[forest beekeeper]

I routinely use straight-line depreciation [it is just simpler than the other methods].

One area where I have seen folks slam themselves is that once you have depreciated an item to zero, then you are saying it is worth zero. If you sale or trade that item, and it shows a value of greater than zero, you made a taxable profit.

Routinely re-investing improvements into that piece of property can keep it's 'cost-basis' up above zero for you. So that it still has value and you can continue to depreciate it. And so that when you finally do sale or trade the item, it does not show a profit.