It may be unclear as to whether you used this equipment for personal purposes before you decided to make it available for rent to others to produce income for yourself.
- If you used it for personal purposes first, then decided to rent it out, then you would use the date placed in service for rental.
- The cost basis for depreciation, if used for personal purposes first, would be the lower of cost or fair market value (FMV) on the date you began to use if as a rental of personal property (as opposed to real property).
No you would not go back 10 years in your scenario to take depreciation on the asset.
And you do have the right formula for determining business use percentage. The total time used for business divided by the combined total time used for both business and personal purposes. This percentage would be used times the cost basis you are allowed to use (see #2 above) to arrive at the business cost for depreciation.
Based on your other information it seems you know how to report this, although I want to be sure we are on the same page. Equipment rental must be reported on Schedule C, self employment income unless this would be a hobby.
@markdosborne
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
