Is a Thru Wall Air Conditioner an Expense or an Asset

Purchased a thru the wall air conditioner for my home office.

Is this an expense or an assest?

Reply to
TomBk
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Purchased a thru the wall air conditioner for my home office.

Is this an expense or an assest?

Reply to
TomBk

If an item purchased becomes part of a building it is a fixed asset. If you are leasing the office it will be an addition to your Leasehold Improvement account. My rule of thumb is - if it is less than $200.00 I expense it.

Reply to
catrick

Depends on the size of the business. I worked for a large corporation that expensed anything under $500. That amount might raise some eyebrows in a small business. The IRS says it's related to the time it'll last but obviously there must be some common sense approach. I have a marking pen that has lasted more than 7 years. FWIW, the IRS will not give you a dollar amount until after the fact.

Bob

Reply to
RobertM

Either. Your choice.

You can capitalize and depreciate, or Captialize and not depreciate, or Expense the item.

Section 179 allows you to expense personal property (not land) the year you buy it, up to a limit ($102,000 in 2004). I don't keep up with the changing limit since I never hit it.

So, then, from a tax perspective, if you're losing money this year, better to capitalize and depreciate to get the deductions in the ahead years when you will make money. If you're making a profit, expense the sucker now to lower your tax bite.

Or you could expense the item even if you're losing money and carry the loss forward.

Bottom line: I don't know. Ask your accountant.

Reply to
HeyBub

Magic words "Home Office." I'm guessing this means you are a sole proprietor.

Have a nice talk with the person who does your taxes. He can advise you on this. We can't give you a correct answer without knowing a lot more about your situation. For instance, can you legitimately claim a home office deduction? Are you presently taking that deduction? You may even have to be able to show that the A/C doesn't cool any of the living space of your home. Don't forget to ask your tax guy about the capital gains when you eventually sell your house if you are taking a home office deduction. Of course have him explain about your mortgage deduction too. And don't forget to have him explain all the records you need to keep and look them over to be sure they would be accepted by the IRS.

Reply to
Golden California Girls

Hmmm, There's more to this than I thought. I'll just enter it as an expense for now and discuss it with my accountant later. Thanks to all for the insights on what to think about.

Reply to
TomBk

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