> Is such an purchase not a deductible expense, Ken?
Yes it is. However, large purchases do get put on a five-year
schedule. Then when you sell it, you have to record any sale price
above depreciated or expensed price as income. For example, my E-1 is
fully depreciated. So if i sell it for $200, I will end up recording
that as income. No free lunches, just delayed weight gain.
Take 2011 as an example for me. Almost everything has been fully
depreciated, and my DMC-L1 purchase the previous year was expensed, so
I really did need to get my deductions back in order again. So, the
computer purchase helped. I have it on a five-year schedule (actually
seven thanks to a recent tax law change which allowed me to only claim
1/2 year the first year). I actually had a positive income after all
other expenses and costs of doing business, but the depreciation of
the computer and other items (flash gear, mostly) was enough to take
me back down below the line. That made for a rather "low tax" year.
The IRS does frown on it when it's year after year, so 2012 has to be
a good year. So far, it's looking like I'll be needing to pay, so I'll
be doing some adjustments accordingly. Of course, if I sell the A1,
E-1 and DMC-L1, I'll be paying taxes on that. This is one reason why
you can hit up old film labs for donation gear. They have the stuff
off the books and if they sell it to you, they'll just have to record
it as income.
AG
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