Today TaxMama® hears from Insha in the TaxQuips Forum with this question. “I run a daycare center in my home. I file a Schedule C on the cash basis. In February 2011, I bought an asset for my business that cost $2,000. I’m making payments of $100 per month on it. So, on my 2011 tax return, how do I list it as an asset for depreciation? Do I use the whole $2,000? Or do I use what I’ve paid on it this year; and just keep adding what I pay each year to the asset?

Today TaxMama hears from Douglas in the TaxQuips Forum with this question. “How does one deduct the attorney fees related to obtaining a patent? The patent is for a video game. The taxpayer is not in the business of creating video games. The plan is to sell the patent to a video game company once the patent is approved.”

Today TaxMama hears from someone with an endless set of questions. “It started out as a question about a lease buyout, which turned out not to be about an equipment lease, but a landlord-tenant lease, which turned out to be about a tenant-former tenant thing, which…”

 Today TaxMama hears from Scott in the TaxQuips Forum with this question.  “How long would you have to keep a business vehicle to take advantage of bonus depreciation deductions? What if I sold a new business use vehicle after three years, are there penalties?

Today TaxMama hears from Pam in the TaxQuips Forum, with a good question. “1 purchased 1 new vehicle in 2010 that is used for both of my businesses (Sch C). How do I allocate the new vehicle Sec 179 deprecation expense to both businesses?”

Today TaxMama hears from Leslie in the TaxQuips Forum, who is quite clever. “I am helping a friend out with her business.  She currently takes a deduction for having a home office for the company that she runs out of her home. Would it benefit her more to charge the company rent?  I know she would be able to take the rent expense as a deduction on her company’s taxes; but the rental income would then go on her personal return.  So would this approach even make sense?”

Today TaxMama hears from Jared in the TaxQuips Forum,who is confused. “What are the guidelines for writing off a new commercial van?  I need a big deduction. Can I write off the whole thing? I have been to many sites – and even the IRS site is different. I thought it was $25,000 last month when I looked; now it’s saying $3,000.”

Dear Jared,

It’s pretty simple really. But I can see why you’re confused.

You are entitled to the $25,000 Sec 179 limit only with vehicles with a gross weight over 6,000 pounds (unladen, i.e. without cargo) – with certain exceptions.

The lower, $3,160 limit is with light trucks, under 6,000 pounds gross weight.

However, when a truck’s gross weight exceeds 14,000 pounds, you may use Sec 179 up to its limit of $500,000 (for 2010 and 2011), as long as your total vehicle and equipment purchases are under $2 million.

Now isn’t that more than you ever wanted to know?

And remember, you can find answers to all kinds of questions about depreciation and other tax issues, free. Where? Where else? At www.TaxMama.com.

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