USA sole prop..

[mordanty]

Started a sole prop in 2018 in CA.

1. How am I supposed to sell transfer or invest existing personal assets into the prop? Bill of sale? IRS form?

2. IRS depreciation tables don't list TIG welders or welders of any kind. Advice on years to depreciate? Mfg warranties 3 years. Sounds like a resonable "useful life?"

My business is pico. Still purchasing equipment/training/certs and don't want to incur costs of quickbooks type software that I won't need for many years if at all. Thanks for the help.

 

[kirby]

You will need to maintain some form of books and records for your business. At least a manual ledger if you don't want software. Your manual books prove what you transferred into your business.

Take some time to read IRS publication 334 which applies to you. Also see if a business license is required in your locality.

Regarding the depreciation, first use Pub 334 to see if Section 179 can be used by you to expense the welding machine 100% in 2018 .

 

[mordanty]

So write on paper transfer x for fmv of $800. Then claim expense of $800? Section 179 only says you must depreciate over years if it's useful life exceeds one year. Only computers are listed in depreciation table for 3 years. 179 says limited amount up to $510000. Doesn't list the "certain property." Dang IRS double talk.

 

[mordanty]

Okay found something that says equipment, computers, office equipment all qualify. But it also said 179 can't exceed income. I am at the no income, invest every penny you have stage. So the carry over loop may be worse..

 

[kirby]

Pub 334 states that to prepare your tax return you are to " use your books and records. " so just be aware that this is the level of recordkeeping expectation of IRS .
And true that if you have no income you can't use 179 . That key fact was not shared upfront and is an example of why it is best to work with a tax person who can base guidance to you given a complete understanding of your income and business situation.