Tax Tips for 2006 for small businesses.

One of the most overlooked tax tip for small businesses is the ability to depreciate used equipment introduced into a business. Most taxpayers do not even consider depreciating their old assets, however, just because one cannot claim the section 179 deduction, they dont even bother to mention these assets to their CPA's.

If a Taxpayer introduces previously owned assets into his/her own business, then these assets are still subject to the same depreciation methods, except they are not eligible for a one time section 179 deduction.

Also, they these assets are no longer valued at their original purchase price, but rather at their fair market value, which for computer equipment and peripherals would be substantially below their acquistion costs.

Nevertheless, it is worth obtaining a fair market value despite experiencing some depreciation, and then a using the applicable method of depreciation.

The important point here is that for self-employed businesses subject to regular tax and S/E tax at 15.3%, this depreciation benefit can mean a material reduction in tax liability.

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