John R. Bullis: Antiques used in your business
Suppose as a business owner, you decided you need a better desk. You know the entire cost of the desk can be a business expense with the cost all claimed in the year of purchase and when it was placed in service.
Section 179 election to expense the full cost allows that immediate, full deduction, even if you pay for it over a few years.
Perhaps you have looked at new desks and antique desks. Suppose each costs about $5,000 and both will meet your needs.
It probably is better to buy the antique desk since it may appreciate in value. If you buy the new desk, when you try to sell it say 7 years later, you may only get $500 to $1,000.
On the other hand, if you sell the antique desk seven years later, you probably will get $5,000 or even more. It is not unusual for antiques to increase in value.
The tax plan is to buy at a reasonable price, get an immediate full deduction for the depreciation expense and later sell it for a profit.
With antiques, you have beautiful items that you enjoy owning and using. That can make your work even more enjoyable!
There is a limit to the section 179 election. You can only expense up to $500,000 of assets bought and placed in service for year 2017 and there are some other rules to observe. It needs to not be purchased from a relative, etc.
Maybe that antique desk could be better used if the chair was also an antique?
Now it is not good to buy something just for a tax deduction. But if an antique could be used, you might be better off in the long run to look into buying an antique.
Did you hear? “Opportunities are there, but we can’t start out as vice president. Even if we landed such a position, it would not do us any good because we wouldn’t know how to do our work. It is better to start where we fit in, then work our way up,” by Ben Carson and Cecil Murphey.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.