Truck §179, tool depreciation, multi-state license carryover, journeyman 1099 rules, S-Corp setup at $150K net. The trade nobody else wants to file gets filed by humans who know the codes (both kinds).
A 2-truck HVAC operator can carry six figures of deductible equipment in any given year. Most Schedule C preparers miss the vehicle weight test, the per-job material accrual, and the moment net income justifies an S-Corp election. We don't.
Service vans, box trucks, and pickups over 6,000 lbs GVWR can hit full §179 expensing up to $1,160,000 for 2024, plus 60% bonus depreciation on the overflow. Pipe threaders, conduit benders, refrigerant recovery machines, manifold gauge sets, and lift gates all qualify. We time the buy so the deduction lands when net income is highest.
IRC §179(b); §168(k); §280F(d)(7) heavy-vehicle exceptionFlorida master plumber working a Georgia commercial job. License renewal fees in both states, continuing education, surety bond premiums, exam prep, and trade-association dues are all deductible §162 ordinary business expenses. We track the per-state mix so the state apportionment on your business return matches reality.
IRC §162(a); §164 state license taxes; UDITPA apportionmentThe IRS and DOL both look at trade contractors hard. A journeyman with his own tools, his own truck, and other clients is a 1099-NEC. An apprentice riding in your truck, using your tools, following your schedule is a W-2. Misclassifying costs back FICA, FUTA, penalties under §3509. We document the test so you sleep.
IRC §3121(d); §3509; Rev. Rul. 87-41 (20-factor test)Diesel, gas, oil, copper pipe, PVC, fittings, wire, breakers, refrigerant, replacement compressors. These flow through COGS, not Schedule C expenses, when you're a contractor with a job-cost basis. Correct classification lets you front-load deductions and accurately compute QBI. We rebuild the chart of accounts if your bookkeeper has been lumping everything as "supplies."
IRC §263A small-contractor exemption; §471(c); Reg §1.471-3Once net income from the trade clears about $150,000, the self-employment tax savings of an S-Corp election pay for the extra filing cost two to three times over. We benchmark a reasonable wage against BLS wage data for your specific trade and region, then take the rest as distribution free of the 15.3% SE tax.
IRC §1361, §1402(a); Rev. Rul. 59-221; Watson v. USA solo trade operator (just you, or you plus a spouse) can defer up to $23,000 plus a 25% employer profit-share, total $69,000 for 2024. After S-Corp election the math changes (deferral + 25% of W-2). We coordinate plan setup, run the safe-harbor numbers, and integrate with cash balance plans for owners 45+.
IRC §401(k), §402(g), §415(c); §401(a)(17) comp cap2-truck HVAC contractor, S-Corp elected mid-year, $215K net income 2024. We took §179 on a second box truck and a new recovery machine, opened a Solo 401(k), and set the owner wage at $78K based on BLS regional HVAC tech data.
$22,000 savedFederal + SE tax savings combined: $11K on S-Corp distribution treatment, $7K on §179 vehicle and equipment, $4K on Solo 401(k) deferral. State savings on top. Cash for next year's truck already sitting in the retirement plan.