topic New handyman start tax implications in Self employed

New handyman start tax implications

Ctsato — Mon, 04 Nov 2019 20:58:11 GMT

I opened a new handyman business this year. Before opening I had about 20k worth of tools that I use now for my business. They are things from saws to drills. Can I deduct the 20k? If so, what is the period of the useful life to depreciate the tools?

Re: New handyman start tax implications

Anonymous_ — Tue, 05 Nov 2019 03:19:57 GMT

You have to use the lesser of your original cost or the fair market value of the property on the date of conversion to business use as the basis for depreciation.

It is almost a certainty that the tools would have a fair market value that is considerably less than what you paid for them, depending upon age and condition. In fact, the devaluation may be so extreme as to warrant a full write-off of each tool as an expense.

Re: New handyman start tax implications

Ctsato — Tue, 05 Nov 2019 16:25:02 GMT

Thank you. Does this mean I have to write each tool line by line with the fmv of each? Or can I just say estimated fmv of all tools combined at start up was 10k? Thanks again