Tax stuff — some big deduction available in 2023?

[alexdingley]

Hi all,

On the "running the biz" side of these things, taxes & deductibility are certainly something I wonder about yearly. I know there's a routine deduction that's been available for a long while now. Section 179 Deductions (A part of the IRS tax code, Section 179 allows businesses to deduct the full purchase price of qualifying equipment bought or financed during the tax year.) [learn more] but I'm curious if anyone is super in-the-know on this stuff...

A colleague of mine just said that his buddy (who's currently buying and outfitting a studio in a new building for his law office that handles a lot of music-adjacent cases) mentioned that "this year and this year only" there's some big tax incentive to buy gear and deduct it on the 2023 return. My buddy couldn't recall the finer points, and his buddy is a busy guy who's not yet gotten back to him about the follow-up question. So I figured I'd put it out there to the group.

[markjazzbassist]

my tax guy says sure declare it as a deduction but when you sell you need to declare that sale as well. we all know how much gear moves in/out, so most of the stuff i don't deduct.

[digitaldrummer]

I'm not a tax guy (nor do I play one on TV). I've been using section 179 deductions for many years. I try not to over-do it. I have usually been keeping my schedule C music biz to a +/- $1000 profit or loss (but I had other income then). This year will probably be different for me, although I will certainly offset some of my biz, with the purchases I have made. Some of that is "supplies" and some of it may be 179. I will not be getting even close to the "maximum" for any year so I'm sure the "bonus depreciation" will not apply for me either (the link says you have to use the 179 deductions first). And as stated earlier, you have to declare the sales too if you get rid of it (and then you might pay a penalty depending on how long you've had it). There is also a way to retire older or damaged equipment if I recall. It's a lot to keep track of (I do my own taxes w/Turbotax).