Posted by Bill Chambers on July 28, 2015 at 10:25 PM
Since I've gone and made my previous photo hobby into a business I have a tax question. I bought a new lens back in February for approx. $1250. Since it will last longer than 1 year, I will need to capitalize it and depreciate it. My question - how do I determine the useful life period of a lens? 3 years, 5 years, or even longer?
Any tax gurus out there? Any help will be greatly appreciated, and thanks in advance.
Hi Bill, The IRS has asset classes and photo and video equipment is considered 7 year property, so it is depreciated over 7 years but you get higher percentages in the first few years. However, if you have a profit from your business you can elect to section 179 expense (write it off completely) the lens in the first year.
To add to the complexity, there has been bonus depreciation the last few years where you could expense 50% of new equipment in the first year even if you didn't have a profit. This provision expired at 12/31/14 but there is a good chance it will get extended retroactively.
Discussion
3 repliesSince I've gone and made my previous photo hobby into a business I have a tax question. I bought a new lens back in February for approx. $1250. Since it will last longer than 1 year, I will need to capitalize it and depreciate it. My question - how do I determine the useful life period of a lens? 3 years, 5 years, or even longer?
Any tax gurus out there? Any help will be greatly appreciated, and thanks in advance.
Hi Bill, The IRS has asset classes and photo and video equipment is considered 7 year property, so it is depreciated over 7 years but you get higher percentages in the first few years. However, if you have a profit from your business you can elect to section 179 expense (write it off completely) the lens in the first year.
To add to the complexity, there has been bonus depreciation the last few years where you could expense 50% of new equipment in the first year even if you didn't have a profit. This provision expired at 12/31/14 but there is a good chance it will get extended retroactively.
Definitely, if you have enough profit to cover it, classify it as a Section 179 expense and you can write it of in one year.
Thank you su much both Nate & Buck!