What records do I need to keep for purchasing assets?

Hey Abe! I’m considering purchasing some assets for my business, such as a tractor and maybe a trailer to go with it. What kind of benefit do I see, and what records do I need to keep for these purchases?

You are asking all the right questions and are planning ahead, which is great!

One thing to keep in mind is that assets like a truck and trailer aren’t simply “written off.” Instead, these assets are depreciated, which can be handled in several ways. I’ll give you a few examples.

When purchasing a tractor, which is qualified for non-personal use, there are a couple avenues to consider depreciation.

The first is useful life. According to the IRS, the useful life of a semi tractor is three years, and this will determine the depreciation schedule.

You may also consider bonus depreciation, which can be 100% expensed for certain business assets. This incentive allows you to immediately deduct the asset.

The rules change when purchasing a semi-trailer.

Per the IRS, the useful life of a semi/tractor-trailer is five years, and this will determine the depreciation schedule.

You may also use bonus depreciation for a semi-trailer.

The most important records to maintain will be your purchasing documents, specifically the purchase agreement and amortization schedule. These documents are crucial to ensure you are accurately reflecting this figure.

A sound tax planning strategy is important to ensure that you are maximizing your potential savings. Be sure to contact Abacus CPAs for better guidance and smarter decisions when making these purchases. You can reach us at 417.380.5000 or by email at transportation@abacus.cpa.