Tax Question

[Nefertiti]

Allright, it's time for my yearly US tax question. I'm a professional musician who makes his living from playing and teaching privately. Last year I bought a number of items one of which is a Selmer Reference alto . Where is the appropriate place to write this item off? Do I write something like that off in full on my schedule C Part V under other expenses? Or do I write it off on Schedule C Part 2 #13 (Depreciation and section 179 expense deduction)? If in #13 can I write off the whole amount under section 179? or do I have to depreciate it over a number of years? Anyone know the answer to this? The instructions every year always seem kind of vague to me and I really don't want to pay the money to a tax professional for this one question. Thanks to anyone that can help.:)

[hgrail]

From what I remember from my tax prep days...

The alto is an asset from which you expect income -

Therefore you have to depreciate it on the appropriate schedule (it's not an operating expense - like a maintenance thing - it's the purchase of equipment which will be used to generate revenue).
If you meet the requirements you can expense your asset all in 1 year via section 179.

Hope this helps.

[sharp5]

I don't know about in New Hampshire but in NC you can find really good accountants for $50 -$100 bucks. Well worth it to me.

[Mike_K]

hgrail is correct. The sax would be an asset, not an expense - the entire cost should be depreciable under Section 179.

Of course Congress is looking into changing the tax law so that the Section 179 deduction would only be available for bari saxes or bigger.










:D

[JMac]

You can only use section 179 if you have enough income. If you operate at a loss, you will have to stick to 'regular' depreciation. Next question would be, what class of asset, ie - over how many years must you depreciate it, and what method of depreciation should you use? Ah- a little light reading to help you with your questions - IRS Pub. 946 (http://www.irs.gov/pub/irs-pdf/p946.pdf)- How to Depreciate Property.

Good luck in your quest for information, grasshoper!

[cleger]

I don't know about in New Hampshire but in NC you can find really good accountants for $50 -$100 bucks. Well worth it to me.

Glad I don't work in NC, those are some pretty low hourly rates.

[JMac]

I'm with you cleger. He doesn't say that is an hourly rate, though. Maybe that's how much they charge just for letting the clients FIND THEM. A finder's fee.... hmm I like that.

[Nefertiti]

Thanks guys. I think I figured it out with your help. I used Turbo Tax and put it under Section 179 expense. It seems like the right place.

[gary]

Thanks guys. I think I figured it out with your help. I used Turbo Tax and put it under Section 179 expense. It seems like the right place.
LOL - Turbo Tax is what I've used for the past several years.
But I've just written instrument purchases off as equipment.