depreciating equipment for tax purposes

Discussion in 'Business of Photography' started by kam_kozalak, Mar 5, 2015.

  1. Hi,
    I am an amateur photographer. I display my work in local galleries and have sold a few photographs, for which I have to pay taxes, of course.
    I am filling out the necessary forms myself, and one of them is Form 4562 for deprecation of equipment. I used my new printer and camera more than 50% for business last year.
    My first question is concerning written evidence for >50% business use. Do my image files constitute written evidence (there are very few pictures of family, friends, etc. there; almost all are like the photographs I sell)?
    My second question is whether to use GDS (general) or ADS (alternative) depreciation system.
    I would appreciate comments by anyone with similar experience.
     
  2. I would recommend talking to a tax accountant. But for anecdotal discussion here, you'll get more appropriate feedback if you mention which country's tax laws and enforcement agency you're dealing with. Likely you're also dealing with a local state or province's own versions of those issues as well.
     
  3. "I am an amateur photographer."

    No, you're not. Not if you are making sales and paying taxes on them. You are now a professional. Maybe a part-time professional but a professional nonetheless.

    Either way, however, do what Matt says and hire an accountant, regardless of what country you're in.
     
  4. I reside in the United States (New York State).
     
  5. Excellent! New York is practically infested with CPAs. I expect you could find one who can spend an hour answering your questions for a pretty modest little fee. So cheap, compared to the consequences of doing it wrong.
     
  6. Consulting with a tax accountant is the best advice, but wouldn't you expense your equipment at the time of purchase instead of depreciating a percentage yearly?
     
  7. Thanks Ian. I only sell a few hundred dollars worth of photography each year. So depreciating at once is not feasible.
    For the same reason, consulting an accountant wipes away any gains. It should not be difficult to do it myself (I prepare my own tax forms). I just needed advice on a couple of ambiguous points.
     
  8. Kam: "My first question is concerning written evidence for >50% business use. Do my image files constitute written evidence (there are very few pictures of family, friends, etc. there; almost all are like the photographs I sell)?"
    Yes.
    Kam: "My second question is whether to use GDS (general) or ADS (alternative) depreciation system."
    GDS. Generally you would only go with ADS if required to.
    Also, take a look at the hobby loss rules if you haven't already. http://www.irs.gov/uac/Is-Your-Hobby-a-For-Profit-Endeavor?
    I'm a CPA.
     
  9. Thanks, Charles. Very useful answers and information.
     

Share This Page