This article is by Clint Watson, former art gallery owner/director/salesperson and founder of FineArtViews. You should follow Clint on Twitter here.
Last night, your editor and his wife decided to enjoy dinner out. There's nothing like a bottle of wine, a beautiful spring evening, and dinner on the patio at
Pam's to turn "hump day" into a mini-vacation. As we polished off the first bottle (
Carmel Road, 2007 - highly recommend it), somehow the discussion turned to taxes. Like our long-suffering readers, we recently completed our tax return.
Somehow we started discussing the subject of depreciation. Turbo-Tax had automatically figured allowed depreciation amounts on assets that we use in our little company. "But what is depreciation?" Your editor's wife wanted to know.
Drawing upon our vast knowledge of accounting gleaned from suffering through our long six years of college business classes, we took another sip of wine and tried to explain, "you see, bean counters think that as we 'use' an asset, it slowly loses a little bit of it's value each year.....until, eventually, it reaches it's 'end of life'" Her eyes were starting to glaze over now, so we poured some more wine and continued....
"It's all accounting BS, of course, it's like that old leather chair....I've spend years sitting in that chair - wearing down the arm just so, getting the cushion shaped just the way I like it, the leather is getting softer and richer as it ages....but the IRS and the bean counters dismiss it just because its 'older' - but hey - who cares? It's a deduction!"
Now her eyes lit up...."you mean we can depreciate items just cause they're getting older...even if they're getting better....and get a tax deduction?"
"Well, yes...." we wondered where this was going...
"Well...I'm getting older!" she explained, "can we 'depreciate' me for a tax deduction?"
We're ashamed to admit, we rather liked that idea and the accountant in us started to wonder.....
"Hmmmm," we realized we had to tread carefully here, "While it's true you're getting better with age...." we said quite pleased with the start of that sentence, "The IRS probably wouldn't consider you a 'depreciable asset'...however.....if we can just find a way to make you a 'business asset'......"
"We are discussing business" she pointed out.
What can we say? It seemed to make sense after a bottle of Carmel Road......
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It is a well know fact that you can not discuss taxes and depreciation over wine. It requires champagne. Of course any discussion of tax payments should be accompanied by Scotch.
Hope this helps.
Michael