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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29522
Experience:  Taxes, Immigration, Labor Relations
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This is the 1st year of a photography business and my net

Customer Question

This is the 1st year of a photography business and my net income is 0 (I'm currently operating at a loss). I have an S-corp, and a full-time job in addition to the business.
I have about 10K in equipment purchases.
Currently, my P&L has me showing a ~$31K loss for this year.
Is it better for me to use the Section 179 deduction and carryover to future years, or choose a special depreciation allowance?
I would hope that next year I have some net income above 10K and start using this.
Are there any long-term strategies to be aware of? If I used a special depreciation (the 50%) option, could I change that in the future? Do all equipment purchases during the life of the company need to use the same deduction type? Or could you use Section 179 in one year and special depreciation for purchases the next year? Must all purchases in a calendar year use the same type of deduction?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The issue is that section 179 deduction is limited by business income.

So if your business realized a loss - section 179 deduction is not allowed.
You still may choose special bonus depreciation - but generally - if you expect larger income in coming years - it might be more beneficial NOT to use any special bonus depreciation.

Expert:  Lev replied 1 year ago.

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