Does anyone have a divinitive statement as to IRS Depreciation Rules for Cameras?

[DEMDeepEllumMusic]

I was wondering if anyone has come across a hard set rule from the IRS as to how many years you can take to depreciate a digital camera body? I know that lenses would probably be longer same as flashes, studio lights, filters, tripods, light stands, etc but with the technology of digital cameras going through such changes so fast how many years is the IRS using for their basis? 3? 5? 8? 10? With film it was a different animal than digital.

[Debbi]

I think my depreciation is set at 5 years (but the paperwork is at home).

BTW - I've never seen the word divine and IRS in the same sentence (I'm totally giving you a hard time as I knew what you meant).

[boxofrocks]

My CPA says 20%. I dunno what the IRS says.

[TeamTwin]

Depreciation for your gear should follow:
Year 1: 20%
Year 2: 32%
Year 3: 19.2 %
Year 4: 11.52%
Year 5: 11.52%
Year 6: 5.76%

I also think you can take a prorated deduction. If you claim 20% the first year, you can can the 80% the following year, and none thereafter.

For specifically what you can do, speak to your tax preparer and they should be able to provide you with a depreciation schedule, and what you can/can't do.

[brad]

There is also some set amount (I want to say its like $25K) that you can write off each year without having to go through the depreciation process.

YMMV, IANACPA, consult yours.

[ggeen]

You determine the useful life of the equipment. Usually 3-5 yrs. Then you choose a depreciation method-- straight line or double declining. then you track that in your accounting records.

Maybe that BA course work will pay off yet. :)

[dracula02]

Originally Posted by ggeen

Maybe that BA course work will pay off yet. :)

I'm waiting for my BS to pay off

[ggeen]

Originally Posted by dracula02

I'm waiting for my BS to pay off

LOL! Since I typed my last message from my iPhone, I will expand a bit here.

The IRS does not prescribe depreciation or values. They do strongly desire that one uses Fundamental Accounting Principles and that when a method is chosen, that it is enforced. That does not mean one cannot use some other method of depreciation. It will need to be well documented and enforced. The fundamental accounting principles are just easier for most folks to use since it is an agreed upon de facto standard.

Things that will need to be done to depreciate equipment.
* Purchase said equipment for the business. It will show up on the books as an asset for the purchase price.
* Determine the life of the equipment. That will depend on its use and abuse.
* Determine if there will be any residual value. Will the equipment be worth something to somebody at the end of 3 or 5 years? Say, maybe $350 at the end of five years of use. Or is it zero -- intend to throw it away at the end of life.
* Determine which depreciation method it is be use. Straight line depreciation is the easiest. Just deduct the same amount (percentage) each year.

A sports photo might get more wear-and-tear on their equipment. So I don't think 2 years life is out of the question either.

There is more and I suggest talking to a Certified Public Accountant or a car-parking-attendant (CPA) Neighbor CPA taught me that one. I switched from business to computer science.

[DEMDeepEllumMusic]

I know all the accounting stuff (have sat for the CPA exam before so have a lot of accounting course both undergraduate and graduate level under my belt but the last class was over 15 years ago) just wasn't sure if the IRS was saying that the base had to be 7 or 10 years- or if they had loosened up a bit to 5 which seams more logical with the way cameras change now. (also I know about the amount that Brad posted which would cover most shooters here anyway).

Yeah I guess it should be difinitive but I got the idea across, and that was funny about IRS and divine.

(actually applied and was interviewwed to be a field Agent for the IRS back in the 80's but decided not to go that route because of the way that they treated all the people that they were going after).

Thanks

[Jeff Lane]

I think Brad is referring to a "Section 179 Deduction" when he says that "There is also some set amount (I want to say its like $25K) that you can write off each year without having to go through the depreciation process." He's almost right with the amount -- he just slipped a digit -- it's actually $250K. An explanation of Section 179 can be found here:
http://www.irs.gov/publications/p946/ch02.html

As the IRS so helpfully says, "You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions." Essentially, if you're a small-fry photog guy, you can probably take all your equipment purchases each year as a business expense that year, in effect depreciating them instantaneously. That's how I've done all my equipment purchases for years (which, for a law firm, amounts to a one-time purchase of furniture, and occasionally replacing a computer or printer), and both my tax advisor and the IRS seem fine with it so far. (And it makes all those annoying "how long do I depreciate this camera body" questions moot.)

[brad]

Exactly.. although I didn't realize it was that high.. 10 years ago (the last time it was explained to me what magic the CPA does to my books) it was a lot lower.

[DEMDeepEllumMusic]

Thanks for the IRS link, don't see any hidden restrictions on the deduction so looks like the number is $250K which is a lot higher than I thought the current number was, so for all intents and purposes for the vast majority of photogs you can write off the cost of the new equipment as you buy it.