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Can I write off leased equipment?
Small business here. I may have a big gain coming on the sale of a part of my business. Potentially looking to offset some of the gain by writing off some old equipment that is still in use. All of the old equipment is leased. Accounting wise, can I write off leased equipment? If I write it off as a loss, do I have to early term the equipment with the lessor. Does any of this change if the equipment is still in use after the write off?
Thanks
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Technorati Tags: lessor, small business
August 12, 2009 | Filed Under Equipment Leasing Questions
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4 Responses to “Can I write off leased equipment?”
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Questions|Answers
- Wildcat on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- Mr Placid on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- Common Sense on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- Designer Dogs are fancy mutts on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- chatsplas on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- Ranger4402 on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- pickmefirstplz on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- the kid on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- magicbird on Do you think apartment complexes should be sued for failure to provide services aside from maintenance?
- rpg on What kind of bankruptcy options?
- rhsaunders on Net present value?!?!?
- in the China Shop on I want to open a restaurant?
- Sam San on I want to open a restaurant?
- Henry on I want to open a restaurant?
- Metal M on What do you think about my business idea…could this work?
no. the lessor writes it off, silly.
Possibly. You can usually write down (depreciate) certain improvement items and capital items on a progressive 5 year basis. There are offsets with cap. gains, receivables, etc.
Glad to hear that you are taking your business seriously. Consult a small business accountant!
You can write off office equipment as an operating expense if it is a "true" lease, such as a "Fair Market Value" lease for as long as you’re making the payments.
If it’s a "capital" lease, where you own the equipment at the end without a payoff, then you have to amortize & depreciate.
Once the lease is up, if you exercise your buyout option, then you can write off a percentage of the depreciated value.
Check with a local CPA though. some little details on this differ from state to state.
The equipment is not yours to write off assuming it is an operating lease. Typically copiers and the like usually are. Theoretically, you still owe the leases. You do not have title, you cannot transfer their ownership to another party. You would either have to buy out your lease or cancel your lease. I guess then it depends on what your leases say and what was negotiated in the sale of that part of your business.
I am not a tax accountant so I do not know the tax ramifications of this transaction.