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Level 3
posted Dec 31, 2021 2:30:08 PM

Schedule C: Which year should I deduct expenses (Purchase date or date the charge posts to my credit statement)

I purchased equipment for my photography business with an invoice date of Dec 3, 2021 but my credit card will not be charged until January 1, 2022. I use the cash method of accounting.

 

Which tax year (2021 or 2022) should I take a Section 179 Deduction?

0 8 10828
8 Replies
Level 15
Dec 31, 2021 3:05:25 PM

Use the date you actually made the purchase, so deduct for tax year 2021. 

Level 15
Dec 31, 2021 3:32:29 PM

It is always the date of purchase even if you never pay the CC bill. 

Level 3
Dec 31, 2021 3:42:44 PM

I am getting hung up on whether or not the credit card statement POST date matters.

 

The purchase was made in 2021 but the charge will not POST to the Credit Card account until 2022.

 

I use the CASH method of accounting, not Accrual.

 

 

Level 15
Dec 31, 2021 5:01:09 PM

PURCHASE DATE .... the one on your receipt.  It is immaterial when it posts to the CC  or if you ever pay off the CC charge.  

Level 15
Dec 31, 2021 5:27:53 PM

The purchase date is the date *YOU* no longer control that money. It doesn't matter when it's actually posted. If you scan that credit card today, then *today* is the day you committed to the purchase and no longer have control of that money used to make the purchase. Doesn't matter when it actually posts either.

Level 3
Dec 31, 2021 7:58:14 PM

New Twist:

 

The items wont ship until 2022 so they obviously wont be placed into service until 2022.

Does this change anything regarding which year I take a Section 179 Deduction? (Invoice date for purchased items was in 2021)

Level 15
Dec 31, 2021 8:18:01 PM

The items wont ship until 2022 so they obviously wont be placed into service until 2022.

Does this change anything regarding which year I take a Section 179 Deduction? (Invoice date for purchased items was in 2021)

 

 

yes, that changes things at least in my opinion. the fact that you don't have the equipment and it has not been placed into service in 2021 is a material fact. you can't deduct until equipment is put into service.

 

Level 3
Dec 31, 2021 11:00:06 PM

I can add that the items were available to me for in-store pickup and were therefore "availiable for use".

 

From what I can determine: 

 

Only when the asset is "placed in a state of readiness and availability for a specifically assigned function" will the IRS allow depreciation to commence.

 

It seems no different than if I shipped the items due to a business location move.