Tax Question - Business Credit Card and Payments

[Ruger22C]

I have only one question, and it's about when I can deduct credit card payments or expenses placed on my card.

Details:

I bought a camera body in Nov 2019, for my photography business.
Through Dec 2019 - Aug 2020, I intend to make payments on that card.

Can I count the payments made in 2020 as an expense for the 2020 tax year, or do I have to count the entire cost of the camera body as an expense for the 2019 tax year? Assume that I want to deduct rather than depreciate.

I just called the IRS, and they're unwilling to answer business tax questions. Or at least, my question? So, here I am.

 

[deadlyapp]

You deduct the full value of the camera in the year it was purchased and started being used / placed into service.

Also - you need to be careful - you don't get to necessarily say whether or not you want to deduct as a business expense or if you need to capitalize it and then depreciate it.

 

[Ruger22C]

You deduct the full value of the camera in the year it was purchased and started being used / placed into service.

Also - you need to be careful - you don't get to necessarily say whether or not you want to deduct as a business expense or if you need to capitalize it and then depreciate it.

Got it, thank you sir.

And regarding deduction vs. depreciation, as far as I understand, it's straightforward as long as it qualifies under de minimis or 179. Is that basically correct?

 

[deadlyapp]

Got it, thank you sir.

And regarding deduction vs. depreciation, as far as I understand, it's straightforward as long as it qualifies under de minimis or 179. Is that basically correct?

I'm going through this same thing right now since I started a business this year. For the camera you are talking about, my understanding is that yes you can use 179 and fully deduct it - but that doesn't apply to necessarily everything you can purchase as capital projects.

 

[brianmanahan]

depreciation splits up the value of the item over several years, regardless of when the payments are made

at least that's how i've seen it done

 

[highland145]

depreciation splits up the value of the item over several years, regardless of when the payments are made

at least that's how i've seen it done

At some point in the past, you could deduct $100K of business equipment in a single year. I did that with the company trucks in 2007 and 2010. That may well have changed. I paid $6K for a new HVAC at the rental so I'll be finding out soon enough....from the CPA.

 

[brianmanahan]

At some point in the past, you could deduct $100K of business equipment in a single year. I did that with the company trucks in 2007 and 2010. That may well have changed. I paid $6K for a new HVAC at the rental so I'll be finding out soon enough....from the CPA.

yeah my grandparents section 179'd some equipment expenses to a single year once, to balance out larger than expected sales

it's still possible AFAIK

 

[deadlyapp]

At some point in the past, you could deduct $100K of business equipment in a single year. I did that with the company trucks in 2007 and 2010. That may well have changed. I paid $6K for a new HVAC at the rental so I'll be finding out soon enough....from the CPA.

Still can up to 1MM and 2.5MM with bonus method. but I think changes in 2020.