Vending Machine Business

[Possi]

I have searched the board and TTB and still have a couple of questions regarding my client who purchased 22 machines for $19,950 and began a vending business last year.

Just like any other business, I want to depreciate the machines, but I want to lump them together as one purchase.

I believe they will be 7 yr property.

Any assurance out there for me? Am I right in my thinking?

Thanks!

[BHoffman]

I have searched the board and TTB and still have a couple of questions regarding my client who purchased 22 machines for $19,950 and began a vending business last year.

Just like any other business, I want to depreciate the machines, but I want to lump them together as one purchase.

I believe they will be 7 yr property.

Any assurance out there for me? Am I right in my thinking?

Thanks!

Possi - I agree with 7 yrs. What will you do when/if they are sold/scrapped separately?

I'm also giving your interesting question a bump

[HBurkholder]

I know it takes a lot more input time but I would input each one separately. They may sell or otherwise dispose of individual machines in the future. It will be much easier to handle that at that time if you separate them now.

[Possi]

I was afraid of that...

I was thinking of that. When they get rid of them, how would I handle it. I suppose I'll list them with numbers for identifying.
I don't do much depreciation, and when I do, I usually use MACRS straight-line. Is that what you would do?

[WhiteOleander]

I read an article last year about this issue. It said that if you put all the pieces into one item, it can cause a problem if you sell one piece later. You cannot break out the depreciation to the one piece you sell or otherwise dispose of. So, you have to sell it with a zero basis. The depreication of the one item continues on unchanged.

Get your client to number them or something. Then he can say "I sold number 30" and you can take it from there.

So I would list them all sepaately. My brother works for a vending company. Those machines take a beating and wear out!!!!

[Possi]

thanks

Ok, I will do it! And I will be GLAD I did!!
Thanks for your input.
~possi

[veritas]

I agree with

seperating the machines for depreciation purposes .

But I don't agree with the years. Is there an asset class for vending machines that says 7 years? I don't recall one.

[Possi]

class vending machines

seperating the machines for depreciation purposes .

But I don't agree with the years. Is there an asset class for vending machines that says 7 years? I don't recall one.

No, but it doesn't seem to fit anywhere else, and TTB 9-8 puts in 7 yr "anything that does not have a class life and has not been designated by law as being in any other class."

I took the bonus depreciation on each one as well. VA does not conform, so the state is doing it's own little dance, but so be it.

I took the bonus depreciation to get a larger refund now, helping the client with cash flow in the business. Also because I do not expect the machines to last 7 years....

I'm still sitting on this return, awaiting your chatter! =)

thanks

[veritas]

Look at class 57.0

Distributive trades and services.

[Possi]

class?

Distributive trades and services.

I can't find it........TTB nor IRS pub.....

[veritas]

See page 9-8

Top right side in TTB.

[tilt53]

ProSeries says that a vending machine is 7 years. I don't know what program you use, but if PS, right click on asset class and "about" and it will lead you to an alphabetical list of assets.

[veritas]

ProSeries tells you

what class to put depreciable assets under?

Isn't that tax preparation?

If it tells you 7 years, what asset class did they pull that from?

[Possi]

asset class

ProSeries says that a vending machine is 7 years. I don't know what program you use, but if PS, right click on asset class and "about" and it will lead you to an alphabetical list of assets.

TaxWise doesn't do that. I'm left to my own devices. I don't really know what "Distributive Trades and Services" are, so I wouldn't have put it there. I wanted to use 5 yr mainly because I don't think the machines will LAST much longer than that, but not knowing what "distributive trades and services" are, I didn't entertain the thought of putting it there.

I wish my program had the old "right click" going on. It would sure make my life easier... and yours, too since I come to the board with my questions!

=)

[veritas]

class 57.0

Asset
Class Description of Asset
GDS
(MACRS) ADS
57.0 Distributive Trades and Services. Includes
assets used in wholesale and retail trade,
and personal and professional services.
Includes Section 1245 assets used in marketing
petroleum and petroleum products. Also
includes personal property used in a rental real
estate activity, such as appliances, carpeting,
furniture, etc. (Announcement 99-82)
5 9