Tax Deduction As A Business?

Has anyone purchased their trailer as a business expense and taken a Section 179 tax deduction? Considering options.

Has anyone rented out their teardrop?

 

What an interesting question!

I’ve been a sole proprietor of a business (not a tax lawyer!), and have used the Sec. 179 deduction many times. It really favors small business, vs. taking years of depreciation annually in taxes. The deduction gave me a much easier method to account for essential equipment purchases than the standard method of depreciation. Perfect for someone who doesn’t have an accounting service or staff.

To my limited understanding, you’d need to:
Be in business to make a profit.
Purchase for a legitimate business purpose.
There’s some length of time for evaluation, 3 or 5 years IIRC. Would you be on in the red or in the black with your business, profit or loss? That’s a potential audit flag.

When all is said and done, if you’re successful with this (see your tax professional!), you write off 100% of the cost in the tax year you acquire it, file a Schedule C Business Profit/Loss with your taxes every year, and receive the benefit of not being taxed on the income you used for your purchase. Say you’re in an 10% tax bracket and you buy a $20k trailer, your benefit would be not paying income taxes on $20k of your income, a net $2,000 savings.

But, do you have business income? Potential audit flag...

If I haven’t made it clear, I am not a lawyer or a tax professional, and am not qualified to offer legal or tax advice. I’m just sharing my experience of using Sec. 179 deductions in my small business.

Federal taxes are lower than they’ve ever been in my lifetime. Is it worth it?