Quick question about tax deductions.

[fuzzybabybunny]

After I become an LLC or sole proprietor or whatever, can I deduct things off my taxes that were purchased BEFORE the business was created? So if all the business paperwork gets processed at the end of April, will I still be able to deduct things like my cameras, lenses, and software that were purchased before April, even years before April, that will be used for the business?

 

[arkcom]

Purchase them from yourself?

 

[Miramonti]

There isn't necessarily a specific date that you become a sole prop, you can often just do your taxes with a schedule c for the given year. Just make sure you keep receipts and can reasonably substantiate that it is actually for the business (ie its not a cruise receipt for the bahamas when you have a chimney sweeping business). You should also open a different bank account to keep business transactions separate.

/Edit: I don't know about 'years' before, that's stretching it and probably is not normally acceptable. An llc would be much harder to writeoff previous expenses since you probably have a concrete start date.

 

[dbk]

i don't think so
http://www.irs.gov/businesses/...e/0,,id=109807,00.html

 

[Colt45]

Should be able to sell your personal stuff to the company, but i don't think you can pay yourself new value.. or.. i dont know.

 

[fuzzybabybunny]

Well damn. Looks like I need to hold off on buying any kind of gear for the business until all the paperwork's done. The problem is that I'm already physically doing the work, and would like some gear now to help me do it better. Panorama bracket, fisheye lens, remote shutter cord, gas, software, hosting, garrrr...

 

[fuzzybabybunny]

Originally posted by: dbk
i don't think so
http://www.irs.gov/businesses/...e/0,,id=109807,00.html

I'm going to have to pore over this stuff tonight. It's fascinating, but saddening at the same time. All business startup costs have to be capitalized? Well damn, all my camera stuff I guess is part of the startup cost then and can't be deducted. ALSO, they can be considered "tools," and only "tools" with a life expectancy of less than a year can be deducted. Crap. I might have some luck depreciating my camera, but that might be about it.

And if I were to upgrade to a better body, say... a Nikon D700, that would be classified as a business "improvement," and improvements can't be deducted either.

Basically it seems like the only things that can be deducted are things that are absolutely necessary to the business. I suppose there's some amount of play there. I suppose a new D700 can be classified as necessary if I point out that I need a backup body in case the primary fails. Same with extra hard drives and stuff. Man, I don't want to spend MORE money to hire a CPA or attorney ><

 

[dbk]

Originally posted by: fuzzybabybunny

Originally posted by: dbk
i don't think so
http://www.irs.gov/businesses/...e/0,,id=109807,00.html

I'm going to have to pore over this stuff tonight. It's fascinating, but saddening at the same time. All business startup costs have to be capitalized? Well damn, all my camera stuff I guess is part of the startup cost then and can't be deducted. ALSO, they can be considered "tools," and only "tools" with a life expectancy of less than a year can be deducted. Crap. I might have some luck depreciating my camera, but that might be about it.

And if I were to upgrade to a better body, say... a Nikon D700, that would be classified as a business "improvement," and improvements can't be deducted either.

Basically it seems like the only things that can be deducted are things that are absolutely necessary to the business. I suppose there's some amount of play there. I suppose a new D700 can be classified as necessary if I point out that I need a backup body in case the primary fails. Same with extra hard drives and stuff. Man, I don't want to spend MORE money to hire a CPA or attorney ><

read this section over
http://www.irs.gov/publication...n_US_publink1000144871

 

[Miramonti]

Originally posted by: fuzzybabybunny

Originally posted by: dbk
i don't think so
http://www.irs.gov/businesses/...e/0,,id=109807,00.html

I'm going to have to pore over this stuff tonight. It's fascinating, but saddening at the same time. All business startup costs have to be capitalized? Well damn, all my camera stuff I guess is part of the startup cost then and can't be deducted. ALSO, they can be considered "tools," and only "tools" with a life expectancy of less than a year can be deducted. Crap. I might have some luck depreciating my camera, but that might be about it.

And if I were to upgrade to a better body, say... a Nikon D700, that would be classified as a business "improvement," and improvements can't be deducted either.

Basically it seems like the only things that can be deducted are things that are absolutely necessary to the business. I suppose there's some amount of play there. I suppose a new D700 can be classified as necessary if I point out that I need a backup body in case the primary fails. Same with extra hard drives and stuff. Man, I don't want to spend MORE money to hire a CPA or attorney ><

They can all be deducted as business expenses. I'd try and explain but I don't completely understand how I do it myself, just how my accountant taught me to do it. I use form 4562 (depreciation and amortization) and then make a special depreciation election at the end of the return (or elect to not take an election? 😕) in order to write it all off at once. Thats the short of it all (I do as taught. 😀)

I'd recommend you talk to a knowledgeable accountant in detail so that you get off on the right foot.

 

[summit]

hire an accountant, it will save you time and the headache.