Hello Everyone! I am starting a photography business this year, though I will most likely not actually charge anyone till next year. (I've been shooting for friends for free to build a portfolio)
I am buying a new camera and some professional lenses, I will use them for everything, normal picture taking (family friends vacations) and also for business.
I would like to take a 100% deduction due to the fact that whenever I am taking pictures (paid or not) I am always practicing and improving my skills, which is necessary in this business. Is this good logic to take this 100% deduction?
Part 2: I heard something about taking 100% depreciation this year (2011) for capital equipment- would this camera purchase qualify?
Thanks for helping me get started in my small business!
Depreciation expense is not a "beginner" topic in the world of tax. Advice that has been repeated on this webboard time after time is to seek assistance from a professional (EA or some other type of tax expert) in the year you start or end a business. The National Association of Enrolled Agents (NAEA) at
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has a "find an EA" search link.
Beyond that, the phrase you want to start with is "facts and circumstances". These are critical to how your profit motive, if any, and your "ordinary and necessary" expenses, are usually determined if push comes to shove.
Start with the following link: "Business or Hobby? Answer Has Implications for Deductions"
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9490,00.html A link from this page will also take you to Pub 535, Business Expenses. I also suggest you look at Pub 334.
In addition to the other post, it is conceivable that you can qualify to take a deduction for the camera. Some things to remember:
(1) The deduction is based on the percentage business use. If you use the camera 10 hours for personal and 990 for business, then 990/1000 is business use. There might be other ways to count, such as number of business pictures taken versus total number of pictures, but I don't know much about this.
(2) You can only deduct the asset all at once if your net income is more than the cost of the item. Say your camera is $500 (including sales tax, shipping). If you run your business as a Schedule C business you can only deduct the full $500 if your income from the business plus other income is more than $500. So if you have another job, or your spouse works, then you can do that. If you run your business as a C corporation then you can't deduct the $500 unless you have income.
(3) Otherwise deduct over the class life, which I think is 5 years as a camera is a type of computer. Using the straight line method you would deduct $50 in the 1st and the 6th year, and $100 in the middle 4 years.
(4) You can only take the deduction if you're open for business. It sounds like you're in training, so the camera would be deductible as a start-up cost next year. I don't know if the cost can be taken at once though or must be amortized over 5 years. But if you have more than $5000 in startup costs then it gets complicated.
(5) It might be a good idea to advertise, say on Craigslist, just so you can say that you are advertising so that you can deduct costs.
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