Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Business Owners: learn this key element when disposing assets. #TaxTips #BonusDepreciation

Name: Painting Business Owners: learn this key element when disposing assets. #TaxTips #BonusDepreciation
Uploaded: 2024-06-26T13:15:02+00:00
Duration: 52 s
Channel: Daniel Honan
Description: Painting business owners can fully deduct qualifying vehicles under Section 179, but watch out: when you sell or trade the vehicle later, depreciation…

26 Jun 2024 · 1 min

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Painting business owners can fully deduct qualifying vehicles under Section 179, but watch out: when you sell or trade the vehicle later, depreciation recapture kicks in and you'll owe taxes on those deductions. Talk to a tax preparer before claiming the upfront break.

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A lot of folks don't realize that, oh, I can just fully expense it as long as it meets the Section 179 requirement, then I can just keep doing that and just trading my vehicles in and getting a big deduction.
It's very easy to see the big tax breaks up front, but we need to stop and think about what happens when we go to dispose of the property. And dispose means sell, trade in, or convert to personal use. We can't take the pickup truck that we were using for work and then give it to ourselves a few years later and not expect to recapture that depreciation. Definitely a conversation to have with your tax preparer, try to understand like the long-term effects. It may very well be in your interest to get your tax break up front, especially if you're going to completely use up that vehicle. If you intend to trade it in right away or you intend to convert that to personal use within a year or two, be aware of the consequences of accelerating depreciation.