Owner Operator Appreciating an asset

[Ontario Outlaw]

Maybe the USA is different than Canada so maybe nobody on here can answer this-

Would you appreciate an asset?

I don’t really know the ins and outs of this other than it can’t be maintenance. It has to be something that extends the useful life of the vehicle, motor, tranny, diffs, etc

 

[tommyh]

appreciate or depreciate?

 

[Ontario Outlaw]

Appreciate

 

[Fageol]

Appreciate

If what you're doing to your rig is beyond maintenance, as a general rule, tax laws in the USA, require you to capitalize the cost of that increase in value. In accounting-talk, you increase the basis of your truck or whatever. Increases in basis are equivalent to appreciating your truck or other assets. I haven't researched the nature and effect of safe harbors (simplified expensing) for truckers or for much else. If the tax laws in Canada are similar to those in the US, then you might, under some interpretation of a safe harbor, get away with expensing something that extends the useful life of your asset.

 

[Ontario Outlaw]

If what you're doing to your rig is beyond maintenance, as a general rule, tax laws in the USA, require you to capitalize the cost of that increase in value. In accounting-talk, you increase the basis of your truck or whatever. Increases in basis are equivalent to appreciating your truck or other assets. I haven't researched the nature and effect of safe harbors (simplified expensing) for truckers or for much else. If the tax laws in Canada are similar to those in the US, then you might, under some interpretation of a safe harbor, get away with expensing something that extends the useful life of your asset.

From what I understand you’re taking the “expense” and moving it to the “balance sheet” so you can “depreciate” the expense over a couple years.

Basically writing off a large expense over 2-4 years instead of just writing it off in one year

 

[Fageol]

From what I understand you’re taking the “expense” and moving it to the “balance sheet” so you can “depreciate” the expense over a couple years.

Basically writing off a large expense over 2-4 years instead of just writing it off in one year

Unless the tax laws have changed, that's the way it works in the US. A safe harbor election might give you a tad more flexibility in showing an outlay of money in a P&L or in a balance sheet. I think you're on the right track.

 

[Ontario Outlaw]

Unless the tax laws have changed, that's the way it works in the US. A safe harbor election might give you a tad more flexibility in showing an outlay of money in a P&L or in a balance sheet. I think you're on the right track.

Thanks!
I should hear back from my accountant next week sometime. Then we’ll come up with a plan

 

[r3gulator3]

Would you appreciate an asset?

Oh, I do appreciate a nice “ass”et!