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Client files schedule C for his business. He is replacing some equipment that is not fully depreciated. How do I handle this?
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Whats he doing with the old equipment?
♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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He's not selling it. he is either junking it or giving it away, usually to one of his wife's students.
When he buys something new now, I have started asking him about how long he thinks it will last so I can expense at least part of it via 179. Graphic designers have to stay really up to date on hardware; no computer lasts five years with that kind of use.
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If it is junked, enter a $0 sale price. If it is given away, enter the disposition date and leave the sales price BLANK to stop the depreciation (you don't get to claim a loss if it is gifted away).
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Apparently that's the correct way, although it shows up on Form 4797. If depreciation could be continued, that would appear on Schedule C and reduce SE tax. So using Sec 179 and other accelerated depreciation methods is usually the best choice -- or using a business entity that does not file Schedule C.
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Thanks so much. I didn't feel like he should benefit from depreciation on something he doesn't have, but I couldn't figure out how to do it.