Reservations filled before '08

[Peter Richardson]

I'm reservation #1244 and am wondering if my reservation will be filled before 2008. The reason I ask, as the tax-savvy might have guessed, is that I'd really like the tax benefit of buying the camera in '07 (about 35k sitting htere for this camera that the tax man is going to take a big slice of unless I can give it to Red).

I'm wondering, if for some crazy reason the cam doesn't get delivered before '08, that Red will let us "buy" it in '07. I'd be more than happy to give them my money and let them collect interest on it for a couple months if it means I can pay for the camera in '07. Thoughts?

Peter

[Alexander Nikishin]

Wait till the 15th of this month, there should be a new schedule up from Jim himself answering your concerns.

[Peter Richardson]

Thanks Alexander. Staying tuned...

Peter

[Álex Montoya]

I am in a similar position, Peter.

I guess it wouldn't be a problem for RED to cash early.

[Michael Hastings]

I'm reservation #1244 and am wondering if my reservation will be filled before 2008. The reason I ask, as the tax-savvy might have guessed, is that I'd really like the tax benefit of buying the camera in '07 (about 35k sitting htere for this camera that the tax man is going to take a big slice of unless I can give it to Red).

I'm wondering, if for some crazy reason the cam doesn't get delivered before '08, that Red will let us "buy" it in '07. I'd be more than happy to give them my money and let them collect interest on it for a couple months if it means I can pay for the camera in '07. Thoughts?

Peter

I've thought about it too. This is probably more of a question for your tax accountant/tax lawyer. Prepay in '07 delivery in '08 probably wouldn't withstand an IRS audit if you are trying to deduct the purchase as a depreciation or accelerated depreciation expense.

If there are clear rulings that this is allowed, it's one thing (I suspect it isn't), but if not it probably isn't fair of us to ask a brand new company to facilitate evasion.

[Curran Giddens]

Same position here....

[Dominique Grenier]

I've thought about it too. This is probably more of a question for your tax accountant/tax lawyer. Prepay in '07 delivery in '08 probably wouldn't withstand an IRS audit if you are trying to deduct the purchase as a depreciation or accelerated depreciation expense.

If there are clear rulings that this is allowed, it's one thing (I suspect it isn't), but if not it probably isn't fair of us to ask a brand new company to facilitate evasion.

I don't know for the states, but here in Canada (at least in Québec), what matters is the date on your invoice, not when you take possession of your goods. You made your expense at the time you paid for it, and that is what count for the government.

The same way, if you bill a customer on december 31st, 2007, and your customer pay you january 5th, 2008, you'll pay tax on this invoice for the year 2007...

[Ben Ponce]

I actually e-mailed red yesterday about their first production run and got a response saying that if I put my deposit down yesterday that I'd probably get my Red early 2008. So I would assume you should get yours by December the latest.

[Michael Hastings]

I don't know for the states, but here in Canada (at least in Québec), what matters is the date on your invoice, not when you take possession of your goods. You made your expense at the time you paid for it, and that is what count for the government.

The same way, if you bill a customer on december 31st, 2007, and your customer pay you january 5th, 2008, you'll pay tax on this invoice for the year 2007...

Technically, here in the U.S. it depends on whether you are on a cash or accrual accounting basis as to when a normal expense takes place. Equipment is a little different in that the purchase itself is not deductible, it is the depreciation expense which is typically spread over 5 years for electronic gear (and further confused by the fact that we can accelerate depreciation to the current year up to a maximum of about $100K in a year, which is designed to encourage equipment purchases/investment).

As a manufacturer myself, it has generally been that our customers want to have us both Invoice AND SHIP before the end of the year, to meet all tax requirements (for tax purposes, in accrual accounting, it doesn't really matter when they pay for it - that's just finance.)

You can actually shift things to a later date by counting when it was actually put into service. And it wouldn't necessarily be illegal or unusual to account for it in both ways - this year and/or accelerated depreciation for tax purposes, but slipped into next year for regular accounting purposes so your investors or bankers can see that you actually do make a profit.

With all that said, you can generally get away with it based on the date on the invoice as that is normally the document that is looked at, but again it could easily be rejected in an audit if they find out the truth.

[Jay A. Kelley]

"Early" 2008 is a relative term...

[Peter Richardson]

Yeah, I believe for depreciation terms the IRS cares about when the camera was "put into service," not when it was purchased or invoiced, so hopefully the Red will get delivered by end of '07. I'm planning on using th Section 179 deduction, which allows you to depreciate the full value of the item in a single year, which seems to make it even more essential that the camera be delivered. AquaVideo, does this sound about right? I guess if the date starts getting close with no Red, I will have an in-depth discussion with my accountant :)

Peter

[Ben Ponce]

I listed what the red company's best estimate was (eatly 2008) so relative or not, that's what they said.

[Michael Hastings]

I actually e-mailed red yesterday about their first production run and got a response saying that if I put my deposit down yesterday that I'd probably get my Red early 2008. So I would assume you should get yours by December the latest.


Yeah, I believe for depreciation terms the IRS cares about when the camera was "put into service," not when it was purchased or invoiced, so hopefully the Red will get delivered by end of '07. I'm planning on using th Section 179 deduction, which allows you to depreciate the full value of the item in a single year, which seems to make it even more essential that the camera be delivered. AquaVideo, does this sound about right? I guess if the date starts getting close with no Red, I will have an in-depth discussion with my accountant :)

Peter

Peter that sounds about right, I'm planning on using the section 179 deduction too. (I am refinancing right now to get the cash). As far as when you get yours, it all depends on when they get started and how fast they can really ramp up production. Supposedly we will get a new schedule pretty soon. My gut tells me we are another month before the first res holders get their camera and I think I am August or September with your #1244 in that year end time frame. I think they will be aware that a lot of people want it by the end of the year so they will probably make a big push to do that.

[Finner]

I listed what the red company's best estimate was (eatly 2008) so relative or not, that's what they said.

I think what he meant by early being relative was that the way red has been with its deadlines is that they say plans are for "X" to be done in the 2nd quarter of a year and complete it one day before the third quarter. Not that I think RED is slow or anything because in fact it is amazing that they have been able to complete everything they have done in such a short time. But as far as announcing meeting deadlines I have come to see that RED when they say make a statement that something should be ready early 2008. Probably means that if you get it 182 days into 2008 they would state that this is early 2008 because there are still 183 days left before 2009 so it is early.

[Ben Ponce]

Sure. I agree with you guys. They did say "most likely" get it early 2008. Not attacking anyone here just quoting exact words from Red. Whenever it is ready, it'll be ready. I'm not gonna be impatient here.

[Antoine Fabi]

I am very impatient too, by nature.

...but mastering the art of patience is wisdom.

he he...

patience always leads to better.

Impatience very often leads to mistakes.

[Jonathan L. Bowen]

Yeah that was my thoughts on "early" 2008 -- it could be in March or early April and they could still think that is relatively early. I hope not, though. I don't expect mine any time in 2007 because I just ordered it like 6 weeks ago, but I am hoping to have it by February I have to admit. Not for any specific reason just that I would rather be using that camera by then.