Subject: small business Date: 4/9/99 4:40 PM Author: dearnold Number: of 14250 I am 52 years old and employed, making 22,000 a year. I had 42,000 in a retirement fund from a prior employer. I decided to start up a small business selling go karts, parts and rebuilding their motors and use this money to buy a van and trailer and necessary equipment and parts. I have to travel every weekend to these races to get customers. Because I am not over 59 1/2 and took the money in a lump sum I would have to pay over 12,000 in taxes if it wasn't for the business. My question is since I am just starting the business and all of the money went on the purchase of the van and trailer (paid cash) and equipment (paid cash) and I have not realized any profit how do I decrease the amount of taxes ($12,000) that I owe. I know some about depreciation, amoritization, etc. Thank you for your help.The retirement money is added to your income plus the penality. The business does not affect this.Your business expenses go on schedule C. Your depreciation goes on form 4562 (not sure of number, but it is the standard form used for depr). On 4562 you can deduct as an expense about 18,000 of equipment purchases (van, etc). This will help cut taxes. I think you want to see a CPA to help you out this year.
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