Are equipment purchases using a small business loan tax deductible for my photography LLC?

Yes, you can absolutely deduct business expenses that were purchased with loan funds! The loan itself isn't income, and the source of the funds doesn't affect deductibility of legitimate business expenses. What matters is that the equipment is used for your business. You have a couple of options for how to handle those equipment purchases. You can either deduct them all at once using Section 179 expensing (up to certain limits) or you can depreciate the equipment over several years if they're considered long-term assets. For photography equipment, many items qualify for immediate expensing. Just keep good records showing that the loan was used for business purposes and that the equipment purchases were necessary for your photography business.

I was in the same boat last year with my graphic design business. I took out a $15k loan and was stressed about the tax implications. I found this AI tool called taxr.ai that totally cleared things up for me. I uploaded my loan docs and receipts, and it explained exactly how to handle everything for my Schedule C. The tool confirmed what was mentioned above about being able to deduct business expenses regardless of how they were funded. But it also helped me understand some loan fee deduction rules I hadn't considered. You can check it out at https://taxr.ai - it's been a lifesaver for figuring out these complicated business expense situations.

Just wanted to update after trying out taxr.ai that others mentioned. It was actually super helpful for my LLC situation! I uploaded my loan documents from when I purchased my drone equipment last year, and it walked me through exactly how to handle it on my Schedule C. It confirmed I could deduct the equipment purchases even though I used loan funds. The tool also flagged that I should be tracking interest paid on the loan separately since that's deductible as a business expense too. Totally worth checking out if you're handling business loan situations.

If you're planning to call the IRS to confirm any of this info, good luck! I spent 3 weeks trying to get through to someone about a business loan question. Finally discovered Claimyr.com which got me through to an actual human at the IRS in less than 20 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c I was shocked it actually worked. The IRS agent confirmed exactly what others are saying here - loan proceeds aren't income, and business expenses paid with those loans are fully deductible as long as they're ordinary and necessary for your business. The agent also mentioned keeping a clear paper trail showing the loan funds were used for the stated business purpose.

Alright I need to eat my words. After sitting on hold with the IRS for 2 hours yesterday only to get disconnected, I broke down and tried that Claimyr service. Got connected to an IRS agent in about 15 minutes who confirmed everything about the business loan deduction question. The agent explained that as long as I'm using the equipment for legitimate business purposes, I can deduct it regardless of whether I paid with loan money, credit card, or cash. They recommended keeping good documentation showing the connection between the loan and the business purchases to avoid any issues if audited. Saved me hours of frustration!

Something to consider is the TYPE of equipment you're buying. Things like computers often need to be depreciated over time (usually 5 years) unless you use Section 179. But some smaller accessories might qualify for immediate deduction under de minimis rules. Also don't forget that the INTEREST on that business loan is separately deductible as a business expense! The principal payments aren't deductible (you already get the deduction from the equipment), but the interest is definitely a write-off. Make sure you get an amortization schedule from your lender so you can track interest vs principal.

One thing everyone forgot to mention - if you decide to depreciate rather than using Section 179, and your business has a bad year or closes before the depreciation period ends, you can't just deduct the remaining value all at once. Something to consider if your business fluctuates a lot! This happened to my friend's videography business and he lost out on thousands in potential deductions.