We bought a tractor in 2016 for our equine business on a 5 year loan. How are we able to deduct this expense?

[PaulaM · Accepted solution]

The tractor would be added as an asset and depreciated over its useful life under your business. The interest on the loan would be a deductible expense in the expense section of your business.

[Jlinden7]

@PaulaM I would claim the full price, ie $40,000, of the tractor as a 179 asset even though I have a loan on the tractor for a given period of time and my actual expenses, ie $2500, were less in 2019 than the full price being claimed? Thanks!

[MaryK4]

Yes, for your taxes, you would depreciate any business assets with a usable life of more than one year (or expense using 179 to deduct more early on).  You can also deduct any interest paid on the note as a business interest expense for each year separately.