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I am starting a new sole proprietorship and I have personal…

I am starting a...

I am starting a new sole proprietorship and I have personal woodworking equipment that I am converting to business equipment. Can I expense the FMV through the de minimis safe harbor rule or do i have to depreciate the equipment?

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I have woodworking equipment that i use as a hobby and now I want to start a business. most of the equipment is below $2500 in value. I would like to expense it all in the first year rather than depreciate it over 15 years.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I don't know

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Answered in 6 minutes by:
3/8/2018
Fred Rook
Fred Rook, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 125
Experience: 20+ years as a Certified Public Accountant, including 19 years working in public accounting firms with extensive tax, audit, write-up and consulting experience.
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Hello, my name is ***** ***** I can assist you. You can expense the items by electing the de minimis safe harbor, which means that you can apply the safe harbor to each invoice (ex - $2,500 per invoice). If you are electing the safe harbor for the year, you should attach a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to the return. The statement should include your name, address and EIN, as well as a statement that you are making the de minimis safe harbor election.

Please let me know if you have any follow up questions for me.

Regards,

Fred

Fred Rook
Fred Rook, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 125
Experience: 20+ years as a Certified Public Accountant, including 19 years working in public accounting firms with extensive tax, audit, write-up and consulting experience.
Verified
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Customer reply replied 1 month ago
Also I cannot get a fair market value as the equipment I have is not usually sold used. people hold onto it. can I use a depreciation value instead. in other words. I have a saw that was bought in 2015. I know want to use it in the business. If I did the math for straight line depreciation and subtracted that from the original cost, can i use that for the FMV. example: Saw cost $1500.00 in 2015, use depreciation of $300.00 per year. 2016 $300 + 2017 $300 = $600 total. Start using the equipment in 2018 at a FMV of $900. $1500- $600(accumulated depreciation)?
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Fred Rook
Fred Rook, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 125
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Experience: 20+ years as a Certified Public Accountant, including 19 years working in public accounting firms with extensive tax, audit, write-up and consulting experience.

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