Is there a minimum amount you must spend in order to write-off business expenses from your taxes?

Question

My husband is starting a film company & we're trying to decide if it would be beneficial to upgrade cameras or make do with what we have for now. We live in Colorado & someone told us you have to have a certain amount to claim in order to write it off. Help?!

Answer 1

If you're going to be using personal cameras and transferring them into business use, the fair market value of the cameras would be considered as a contribution of capital to the business. Or, your other option would be to have your company buy the used cameras from you personally. You could write a business check to yourself for the amount. At that point, you could depreciate the cameras for seven years (I know-sounds kind of stupid, doesn't it?), or you can use a Section 179 asset expense election to write off the full value of the asset in the first year of service. The key here is to establish the used value of these cameras. If you were to be audited, the IRS would be looking for a written appraisal of the value of the used cameras.

Good luck with your new venture! Incidentally, it's time to hire an accountant and a lawyer. It's better to set things up right the first time instead of waiting for your year end to have your accountant tell you that you messed things up!

Answer 2

I think that someone had no idea what they were talking about. This said, you need to see a tax accountant. Since your cameras are likely to be used for several years, you may not be able to expense them and will have to depreciate them over several years...

Answer 3

ANY START UP COSTS ARE DEDUCTIBLE IN A NEW BUSINESS ALTHOUGH YOU MAY HAVE TO TAKE AN ACCELERATED RATE OF DEPREICATION FOR CAPITAL EXPENSES .