machine depreciation for 2008 taxes

[esantoro]

If I opt to depreciate my machinery and tools instead of taking a one-time deduction, can/should I depreciate it over three years, or must it be five years...or more?

Thanks,

Ed

[sheathmaker]

If I opt to depreciate my machinery and tools instead of taking a one-time deduction, can/should I depreciate it over three years, or must it be five years...or more?

Thanks,

Ed

I think it depends on the class of the machine (asset) with regard to length of depreciation. This would be a good place to seek professional advice.

Paul

Edited April 14, 2009 by sheathmaker

[kevinhopkins]

Hi... If you don't have an accountant, find a friend that thinks they have a good one, and try to ask them. The tax laws in this country are changing so fast that you might find that you've got a huge advantage with your circumstances. You've really got a lot to gain here, and nothing to lose.

Best wishes,

Kevin Hopkins

[Lobo]

Don't ever forget that if you take depreciation on any asset, then sell that asset at any time in the future, you will have to declare the sales revenue as income (recaptured depreciation).

Example: You purchase a $1000 tool for business use, then take a 5-year depreciation schedule, deducting $200 per year on that tool. After 5 years the tool has been fully depreciated. If you then sell that tool for $500, you must declare that amount as recaptured depreciation, and you will have to pay income taxes on that amount.

There are some circumstances in which you may trade that item for a similar item, then start a new depreciation schedule on the new item.

Depending upon the values involved, it could be very important to get competent advice from a tax professional.

I have seen several folks learn this lesson the hard way!