legomom922 04:24 AM 03-22-2011
Since I am almost out of business except my one DCG, (I am not taking any more on and have sold 98% of my stuff) would it be better for me to take the straight line or the accelerated method? I have no idea how long I will have DCG. She is 3, so at teh most 2 yrs. I assume I should still claim every deduction and do this depreciating stuff until i no longer have her at all? So at the post I will be kinda be in business, is 2 yrs.
I need to use the method that will give me the biggest deductions for last yr, since I do not plan on doing this over 2 yrs. Does that make sense?
TomCopeland 07:43 AM 03-22-2011
As a general rule you always want to use the accelerated rules of depreciation, rather than the straight line rules. This is because the accelerated rules will get you higher deductions in the early years than the straight line method. Deductions this year are worth more to you than deductions next year. There will be no consequence to you if you go out of business in the next few years. You won't have to pay back any of this accelerated depreciation.
There is an exception to this general rule. You don't want to use the Section 179 depreciation rule if you plan to go out of business in the next few years. This rule allows you to depreciate the entire business amount in the first year, but if you stop using the item for your business (or use it less than 50% of the time for your business) before the end of the normal depreciation period, you will have to pay back some of the depreciation.
For details, see my 2010 Family Child Care Tax Workbook and Organizer.
legomom922 08:35 AM 03-22-2011
Originally Posted by TomCopeland:
As a general rule you always want to use the accelerated rules of depreciation, rather than the straight line rules. This is because the accelerated rules will get you higher deductions in the early years than the straight line method. Deductions this year are worth more to you than deductions next year. There will be no consequence to you if you go out of business in the next few years. You won't have to pay back any of this accelerated depreciation.
There is an exception to this general rule. You don't want to use the Section 179 depreciation rule if you plan to go out of business in the next few years. This rule allows you to depreciate the entire business amount in the first year, but if you stop using the item for your business (or use it less than 50% of the time for your business) before the end of the normal depreciation period, you will have to pay back some of the depreciation.
For details, see my 2010 Family Child Care Tax Workbook and Organizer.
I am reading your workbook organizer and thats why all these questions are coming up. LOL You always make things sound so easy when you answer my questions, then I wonder why I am sweating over this stuff. LOL
Ok, so anyway in my case, if I understand this correctly, (I always have to double check myself) since I want the higher deduction, I go with the accelerated, correct?
legomom922 06:53 PM 03-24-2011
Originally Posted by legomom922:
I am reading your workbook organizer and thats why all these questions are coming up. LOL You always make things sound so easy when you answer my questions, then I wonder why I am sweating over this stuff. LOL
Ok, so anyway in my case, if I understand this correctly, (I always have to double check myself) since I want the higher deduction, I go with the accelerated, correct?
Tom? Do I understand this correctly?
TomCopeland 08:45 PM 03-27-2011
Yes, use accelerated depreciation to get a higher deduction in the early years. Sorry I couldn't respond earlier - I was in Texas over the weekend doing training and the hotel had such slow internet service that I gave up trying to use it.