Business investment (Depreciation and taxes)

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Business investment (Depreciation and taxes)

Post by 4nursebee » Wed Mar 13, 2019 4:17 pm

We recently had our taxes done and were very surprised at our refund, it was much larger than expected. We had a lot of business related investments this year (farm and RE) and I expect they explain the refund. It seems the government really encourages business investment.

I was talking to another business owner about this and they told me their accountant had encouraged them to buy a truck, apparently a heavy SUV qualifies for a very large amount of first year depreciation. I was amazed to hear of this.

What else qualifies for such treatment?

I do not want to run out and buy a bunch of stuff but I would like to be aware of the tax laws better as they pertain to these things.

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Re: Business investment (Depreciation and taxes)

Post by Scrapr » Wed Mar 13, 2019 6:57 pm

what kind of business are you in? Do you need anything? Typically we buy 1 or 2 dump trucks for our fleet every year. Then we run the wheels off so residual value is low. If you fully depreciate the asset & then sell it the sale amount is taxable. (depreciation recapture) If you took max depreciation (Sec 179) and then sold a year or 2 in you would get a lot more taxable income.

I'm not up to date on the Sec 179 limits. We just do 5 year straight line depreciation to smooth it out

Depreciation is a non cash expense on your P&L. IOW it is accounted for but it does not use cash

The truck/SUV is legal if over 8k pounds IIRC. But in my mind a bit of a dodge. But a lot of folks use it. I depreciate my small wagon. I have to track personal miles though. I don't know if the 8k GVW is what qualifies for the Sec 179 deduction.

If I had something I needed I would buy it. If I was trying to justify with depreciation I would not buy

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