I am contemplating filing my own taxes as I usually do or hiring a CPA.
The one outstanding question I have is depreciation. Here is my situation:
Spouse and I employed at a company in corp America. Always do my own taxes. Purchased a small business this year. Paid 180k of which 160k I deemed as assets. (Physical business equipment) Space is leased. Financing was done 3 ways. Spouse and I 401k loan to come up with 95k in physical cash (with part of our savings). Remaining is paid monthly as owner financing.
Each month I deduct on my P&L the cost of these loans but do not account for the physical cash to purchase as mentioned above, along with additional other expenses that come with the business.
Tax question. Can I take the 160k and depreciate it over time via straight line (160k /5yrs =32k yr…etc ) AND use the cost of the loans as an offset to the profits made for the year?
Reason I ask is these ARE monthly bills that eat up the cash flow of which I deem an offset but I am not sure if that is double counting?
I was planning to file a schedule C with my personal taxes.
This is a sole member LLC
Thanks
