ARGH help - Tax Accounting Problem + NSFW

[LondonBroil]

(Priginally posted in personal finance but this would get a lot more views)

I'm doing a problem for my tax class finding out someones income tax due or payable. It's a single woman who owns a business and inside the problem it states:

Janice purchased and placed into service the following fixed assets for her business
-Furniture and fixtures (new) costing $19,000 on 1/10/05.
-Computer Equipment (new) costing $40,000 on 7/28/2005.

Janice would like to deduct these costs as soon as possible.

I have to fill out Form 4562 (Deprec. and Amor.) but I'm not sure which way deducts the costs the fastest. Also, does the date they're put in use have any meaning?

And in the spirit of giving, here's mine:









EDITED:OOPS


http://img152.imageshack.us/img152/4564/1oa9.jpg

[skunkworks]

Dude, no inline porn.

[Your Mom]

Yowza, that's an interesting way to share your NSFW material.

[SoCalRugger]

Adding NSFW pics to this kind of crap stopped a long time ago.

[matt777]

Do you have more info (it seems simple given the info you gave). Look at your MACRS (I think the computer is 5 year property and the furniture is seven year property) and depreciate accordingly. Yes the date does matter,it determines whether you use the half-year or mid-quarter convention. (You should read about this)-I'm too lazy to do the math, but the mid-quarter may result in more depn. this year (this is rare).

Also, (I'm not sure if you have gotten to this yet) but you can take a section 179 deduction and expense it all this year. The fact that you state this: "Janice would like to deduct these costs as soon as possible" makes me think this is the point of the question.

Another point: Your wording makes me think you don't understand the difference between depreciation and amortization. Read about this more. You generally depreciate tangible assets and amortize intangible assets. (i.e. you don't choose one or the other, tax law dictates what you do based on what type of asset it is)

Hope I helped and nice picture.

edit: I think you want to use half-year (If you don't use §179), but double check my math.

[dinopoker]

mmmm, Carmen DeCesare - soo hot

[neuroman]

[ QUOTE ]
http://img152.imageshack.us/img152/4564/1oa9.jpg

[/ QUOTE ]
Is that Janice? She is [censored] hot.

[EMc]

I got my hopes up i would know the answer to this...damn intro class.

[LondonBroil]

Matt, thanks for the reply. Yes, she specifically wants to recover the costs as quickly as possible. I got confused with the example in the book but I think I got it.

Basically I'm just going to expense the $40,000 and $19,000 under section 179. The example in my book had them using section 179 AND MACRS but I found out that they had maxed out section 179 at $105,000 and was putting the remaining value of the property under MACRS.

One question: If having cash flow is so important to a business, what reason is there NOT to expense up to the maximum under section 179?

[matt777]

[ QUOTE ]

One question: If having cash flow is so important to a business, what reason is there NOT to expense up to the maximum under section 179?

[/ QUOTE ]
You NEARLY ALWAYS take S179. However, if you are a start-up company and this year you are in a low tax bracket, but expect that in future years you will be in a higher tax bracket you may not elect to do so.

Good luck with tax!