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Old 09-16-2002, 06:58 AM
JPS JPS is offline
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Join Date: Feb 2001
Location: Ohio
Posts: 924
Default Re: Depreciation on music equipment for tax purposes

It is my understanding, as explained by my accountant, that the IRS tax code allows ANY business to EXPENSE upto $20,000 per year. To EXPENSE an item means that the total value of that item is deducted from taxable revenues of the current year. So this is the one-time deduction.

The other option is depreciation, where the value of the equipent is deducted from taxable revenues over the "life of the equipment." IRS has many rules to determine if a piece of equipment qualifies for 3,5,9 years deduction schedules. Usually, shorter is better. Certain items do not qualify for expensing, including vehicles and real estate purchases; they must use depreciation.

EXPENSING is a real windfall for small business owners. I use expensing for computers and a lot of electronic equipment, but I am not in the audio business. Howerer, audio people should be able to expense computers, samplers, software, and PT HD systems, Digi 002s, or what not, upto $20,000 per year. After your $20,000 expense credit is used, then you must use the more common depreciation method, or expense the remaining portion in the following year.
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