Re: Writing off a new horn


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Posted by Rick Denney on January 27, 2004 at 17:45:52:

In Reply to: Writing off a new horn posted by Poor Student on January 26, 2004 at 21:01:46:

See my other post. Expenses are things that get used up (like travel expenses, or office supplies). Capital purchases are things you buy for your business that don't get used up as fast. You can deduct the cost of capital purchases that decline in value, but you should not deduct the cost of capital purchases that don't decline in value. The reason is this: You've lied to the IRS that it is an item that will decline in value, and when you sell it and expose the lie, the IRS will make you pay taxes on the sales amount.

Thus, I do not take deductions for depreciation of musical instruments, even in the days when I had enough income from playing music to justify it. I have deducted depreciation for items I should not have (or my wife did), and the result was a big fat tax bill when we sold it.

It has nothing to do with sales tax, which is governed by state and local laws, while income tax is governed by federal law.

Rick "not giving advice--just saying what he would (not) do" Denney


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