Tax question / free hardware
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Depreciation is based on assested value not just purchase price. Donated assets are depreciated just the same
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What if the asset is treated like a "demo unit" that we will have until it's fully depreciated, at which point the vendor writes it off?
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@Dashrender said in Tax question / free hardware:
@Jason said in Tax question / free hardware:
depreciation credits. With business all physical assets are taxable.
Now sure, you get depreciation credits, but that's based on what you paid (for goods). I.E. I buy a server for $5K, I get to depreciate that over 5-8 years. But if that server is given to me - what would I be depreciating against? Even better, I pay $100 for it, pretty sure I don't get to take depreciation against $5000, but I could be wrong.
If you pay $100 to try to make something not a gift that was really a gift that's called tax fraud
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@scottalanmiller said in Tax question / free hardware:
If you pay $100 to try to make something not a gift that was really a gift that's called tax fraud
You mean... that's just us being "smart"?
haha, sorry, HAD to!
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What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
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@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
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@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
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@Dashrender said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
Yes, exactly. Businesses just gifting things does not make sense as that's not how businesses work. They need to make money, even if just a little. If they are claiming that the equipment is garbage and this is instead of throwing it out, they need to justify that.
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@scottalanmiller said in Tax question / free hardware:
@Dashrender said in Tax question / free hardware:
@scottalanmiller said in Tax question / free hardware:
@brianlittlejohn said in Tax question / free hardware:
What it really all boils down to is Tax Law is unmitigated mess, so you need to ask your CPA what you have to do with those.
Even if the tax law was simple, gifts are complex. The idea that you can give someone something without there being an equal exchange of business value doesn't really make sense in a business setting. So the question becomes... why would a business do this?
Right - if the business giving the equipment away is going to write it off, then they either have to really gift it, or they have to sell it at the value to get the full write off, I think.
Yes, exactly. Businesses just gifting things does not make sense as that's not how businesses work. They need to make money, even if just a little. If they are claiming that the equipment is garbage and this is instead of throwing it out, they need to justify that.
Well, that can be pretty easy to do in today's world. Because if they can give something away, they do not have to pay a recycling firm.
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To shed some light on the 'business value' inquiry - this was a contest win. So the ROI on the sending end is advertising exposure.
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Can you spell out the entire situation? Right now we're just guessing in the dark.
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@TAHIN said in Tax question / free hardware:
To shed some light on the 'business value' inquiry - this was a contest win. So the ROI on the sending end is advertising exposure.
Oh that is not a gift. You will owe full taxes on that. That's payment.
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Sorry I can't get too wordy until we decide if we're going to accept. I'll update you soon.
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@TAHIN so you won that $60k HPE contest on SW?
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@TAHIN said in Tax question / free hardware:
Sorry I can't get too wordy until we decide if we're going to accept. I'll update you soon.
As @scottalanmiller said, prize winnings are income and taxes have to be paid on it.
This is famously known regarding the Price is Right prizes.
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@RojoLoco said in Tax question / free hardware:
@TAHIN so you won that $60k HPE contest on SW?
Affirmative. After a meeting with the CPA and receiving the green light, we are good to go. No taxes will be incurred. Don't ask me to explain it because I don't know how
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@TAHIN said in Tax question / free hardware:
@RojoLoco said in Tax question / free hardware:
@TAHIN so you won that $60k HPE contest on SW?
Affirmative. After a meeting with the CPA and receiving the green light, we are good to go. No taxes will be incurred. Don't ask me to explain it because I don't know how
Congrats
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After some great advice from you folks, we are going to be very disciplined about the fact that you don't just throw something like this into production. A lot of planning hours will go into it. (HP c7000 enclosure with a couple servers and flexconnect gear). Thanks all!
