Tax deductions--one time or depreciate?

Discussion in 'Off Topic [DB]' started by winston, Oct 24, 2005.

  1. winston

    winston Supporting Member

    May 2, 2000
    Berkeley, CA
    Just wondering what other working musicians do with reporting major purchases--take a deduction during the year purchased or do multi-year depreciation?

    My dad (who is a lawyer) did my taxes for years and insisted on depreciating big purchases (like instruments). The accountant who currently does my taxes suggests the same. Every musician/small business owner I know does one-time deduction, which makes more sense to me.
  2. Uncletoad


    May 6, 2003
    Columbus Ohio
    Proprietor Fifth Avenue Fret Shop. Technical Editor Bass Gear Magazine
    First of all I am not an accountant and I always defer to mine in these matters each year. So take anything I say as my own experiences and not rule or law.

    Traditionally in buying small stuff I always section 179 everything. When it comes to larger things, stuff over $1000, in the past I have done depreciation schedules. However in the last couple of years my accountant has 179 more stuff because the limit is like $100,000. In my case the "more than 50% business use" has always applied. Not everyone fits that though and there is where the accountant can be most useful.

    Her thoughts on this usually include questions about the long term use of these things. Namely are there any future changes in potential business use? Reduced business use can be complicated and require me to give some of that deduction back in the future. Also weather I'll need to save some of the deduction power of these items on future income. In other words if I buy a bunch of stuff now with some "extra cash" I've got that I won't see coming in in future years than I should 179 to the limit. If however I anticipate higher incomes in future years then it might be better to reserve some of that depreciation deduction for that income.

    So last year I depreciated stuff that I have loans out on but 179 stuff I paid cash for. This year I may depreciate some stuff to hold back some deduction for later.

    I always defer to my accountant who has a better perspective of my current and long term financial health than I do.

    These links, if still up to date, may be useful

    So lastly, just like we say about teachers, if you don't have one, get an accountant.
  3. Aaron Saunders

    Aaron Saunders

    Apr 27, 2002
    Sounds like it makes sense -- I'd listen to your father and accountant, but that's just me.