Assets for New Business

Forum|Forum|3 years ago
March 25, 2023
1 reply
0 views

In starting a new business in 2022, two assets were transferred from personal use; one asset was purchased used from an unrelated party, another was purchased new and the last was generally available software with a license to use but I must pay to transfer to another party, also purchased as new. All of these items are separately invoiced and each are under $2500. How do I handle these for depreciation/amoritization and/or de minimus safe harbor election?

TurboTax Home & Biz Windows

JosephS1

Depending on what the other assets are, it can be up to you whether you choose to expense immediately or spread out the depreciation/amortization.

Below are links to explain depreciation and amortization. Before electing to fully expense the assets you purchased, assigned, you may want to consider if you truly need the extra expenses this tax year. How much of a tax savings will expensing yield this year? Are you expecting more net income next year that the depreciation/amortization can offset to give you a better tax result next year?

To decide what is best you should look at your marginal tax rate to help you determine whether to take it all this year or spread it out. Even if the amounts are de minimis, that does not mean you have to expense them. It is entirely up to you to decide what is best for you.

Publication 946, How to depreciate property per IRS

What is depreciation per TurboTax

Tax rules for deducting computer software costs

@bdwb

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"