Hobby

[Earl]

New client. Started business (?) several years ago doing photography.
Never has shown a profit - major losses applied against other income.
Started new job in 2013 and did not spend much time in the business.
I am thinking of changing to hobby for 2013 since it probably should
never have been set up as a profit making activity.

My question now has to do with the depreciated listed assets (cameras, etc.)
that were depreciated as 100% business use in the past. They have not been
fully depreciated and if converted from business use to hobby will their use be
considered to drop below 30% since no longer for profit activity and excess depreciation
recaptured or will the same depreciation carry over to hobby activity.

[mammondee]

I had a similar situation this year. I transferred the assets to depreciate on schedule A, and continued depreciating. I took this stance because we were showing the income on the front of the return, so I believe the taxpayer was entitled to the depreciation against that income....

Caveat: I did only a very cursory review looking to see if that was proper, and in this taxpayer's case, it did not make any difference anyway because she still could not itemize.

[taxea]

Transfer the equipment to the new business using the original date in and basis. This will show the depreciation already taken and continue what is left if the item is being used in the new business. If it isn't then remove it on a Sch C for the old business.

[ruthc]

Photography business depreciation

TP has started to do wedding and special occasion photography to an existing small business (small business is only $2K profit with hardly any income). His wife is the breadwinner of the family. He bought lighting ($217), hard drive for computer for photos ($117) and misc items (total $406 - highest item for $217) from EBay. It appears he did a few weddings. I am not sure how to handle the depreciation on these items. These new rules confuse me. Maybe I am putting more into it then needed. I don't know what elections to have him make either. I would appreciate any help. Thanks a lot!