Could anyone help me on this?

I buy a keyboard for $1000 in 2001. When I file for taxes I take the entire section 128 deduction. In 2003, I sell the keyboard for $700. What do I put down for depreciation.

What if I bought the keyboard in the beginning of 2003, took the deduction and sold it later in the same year at a loss.

Does anyone have a clue?

Thank you,


Beakybird

Hi Beakybird

My exgirlfriend does this for a living. She still does mine even though I'm in Florida and she's in Baltimore area. E-mail her, tell her I sent you. I think she will tell you what you need. BTW, she is a genius at this. She gets me unreal refunds.

Her name is Mary . Here's her email.

mapassino@aol.com

Best

Scott

Dear Scott, Mary's email is different now. Do you have an updated address?

BEakybird

[This message has been edited by Beakybird (edited 06-11-2003).]

You can only deduct the difference in the purchase price and the sale price.
DonM

Beakybird
http://www.smallbusinessaide.com/

She is good. The few bucks she charges at tax time makes me a bunch. She knows the loopholes like she invented them.

Scott

If you wrote the entire price off in the purchase year (as I do) then you can't depreciate it at all. The entire price was taken as a deduction. The income from the sale will then be treated as additional; income. It all balances out in the end.

Dave is right. If you write the $1,000 keyboard off as a deduction that first year--that's it--there is no depreciation. Then, if you sell the keyboard, say for $700, that counts as additional income. Essentially, this made that initial $1,000 write-off a $300 write-off. My ultimare goal in life, though there is probably not much of it remaining, is to pay $1-million in income tax on year. Oh Yeah! that would be one hell of a year.

Cheers,

Gary

I didn't read closely enough. Dave is right. That's the way I do it every year.
DonM

Actually, that is not correct. When you wrote off the original $1,000 as depreciation, that is called Accelerated depreciation which is totally legal.

When you dispose of the property, you re-capture that depreciation if there is a gain on the sale of the property. If you dispose of the equipment at less than the market value, there is NO gain and thus no tax implications. You use it to offset the the replacement property you put in service; say a new keyboard.

Bottom line, there are no tax consequences on this transaction since you offset the income you made through the accelerated depreciation expense in the year the income was made. You only claim as income, the gain you make on the sale from the original purchase which in this case is zero.

You are good to go!!!

Al

So Al,

What do you put down for depreciation on the keyboard? It looks like you're an expert, at least to me. I think that it would be helpful to other musicians on this forum if you answered the two scenarios that I mentioned.

Thank you in anticipation of your response.

Larry