- quote -

Had to insert word "NOT" above to make sense.

C$,
H

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- quote -

There was never _any_ non-business use of the asset, it just
wore out early.

Do I just claim that business use is 100% (of 0 total use)?

Seth

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- quote -

Looking at the first three years: once business use drops
below 50%, you have to recapture the *difference* between
the original sec. 179 deduction and what would have been
allowed under ordinary MACRS deduction. That is what I
meant by my comment, even if I worded it sloppily.

Dropping business use even as low as zero percent is not the
same thing as disposing of the asset. Disposition of
business assets is a whole 'nother area that I would have to
read up on before trying to make any useful comments. :-)

-Mark Bole

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- quote -

Look at it this way, Seth and Mark. Any piece of equipment
is written off over a period of time, and we call that
'depreciation' (not telling you anything here of course)
and reflect that fact as a deduction on a tax return, either
in toto first year, or pro rated over a period of time.

If a piece of equipment being written off over five years
wears out in three, like a telephone I have that went kaput
and it's worth fixing, I write off the remaining unamortized
depreciation in the year of disposal and toss it out in the
trash. So it don't matter if I used section 179 first year
or was using "regular" depreciation method.

The phone is toast.

ChEAr$,
Harlan

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wrote:

- quote -

So if I 179 some equipment that normally has a 5-year
depreciation schedule, and by heavy use wear it out in 3
years, do I have to recapture the other 2 years? Do I then
get a corresponding deduction for discarding (selling for
$0) the worn-out equipment that has now been depreciated
down to 40%?

Does it matter if I throw it out or store it in the basement
in a box marked "worn-out Section 179 junk; do not discard
before 1/1/2009"?

Seth

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I have a similar question about Section 179 property:

My wife is a full-time real estate professional - she works
as an agent (1099, not W2), and she manages our own rental
properties.

1) Up until now, when we buy something for the rentals like
new carpet or a refridgerator, I've been depreciating it.
Can she expense these as a Section 179 expense?

2) We are buying a condo which we will rent as a vacation
condo, which means we have to furnish it. Is the furniture
deductible as a 179 expense?

Thanks.

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Mark Bole wrote:

- quote -

an exception which applies on a joint return and only when
the business income originates on a schedule c. Not even
husband and wife partnerships are excepted, since in those
cases the limitation is figured on an entity basis.

ChEAr$,
Harlan Lunsford, EA n LA

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ss wrote:

- quote -

Yes, you can use wage income from a spouse to offset a
section 179 deduction. I did this once on my own return when
my wife bought an expensive piece of equipment. It reduced
our AGI enough that I was able to make a deductible IRA
contribution.

Dennis

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ss wrote:

- quote -

Yes, unless you hit an uncommon exception. See instructions
for line 11, Form 4562.

-Mark Bole

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Mark Bole wrote:

- quote -

Hi all thanks for the sec 179 explanation. You mentioned
that a section 179 deduction can not be taken if there is a
net loss. But What if it is a Married fileing Joint return,
and the other spouse has a regular wage. Can the sec 179
duduction still be taken against the spouse's income ?

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Dave S wrote:

- quote -

I interpret your question to mean, "what
otherwise-depreciable assets can I fully expense in the
current year?" (for a sole-proprietorship, a.k.a.
single-member LLC).

If you replace your frosting-squeeze-nozzle every six
months, expense it as a supply -- Section 179 does not
apply.

If you buy a professional-grade baking oven, normally you
depreciate it. If you buy a set of long-lasting baking pans
and utensils, normally you can clump them together and
depreciate the set as a single item.

Section 179 is a great way to get a big expense deduction
all in one year for the depreciable examples above (the oven
or clump-of-utensils), but that's only valuable to your
business in the current year if you have enough income to
exceed the deduction. It might also be used to help offset
wages in the current tax year for the taxpayer/spouse.

Downside, as pointed out in this group very recently, is
that the depreciable expense that you claim this year under
Sec. 179 cannot be used in a later year to help reduce
self-employement (SE) tax, and if you dispose of the 179'd
assets prior to their normal life, you have to recapture as
income the accelerated depreciation expense you previously
claimed.

-Mark Bole

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Dave S wrote:

- quote -

Yes if she is "in business" when the equipment was bought.
Depreciation including the Sec 179 treatment (taking it all
in the first year) begins when the business begins.
However, you may have a problem with taking Sec 179 against
a loss.

Most small and new businesses run at a loss their first few
years. In which case, depreciation is allowed but Sec 179
treatment isn't. Besides, you get to use depreciation
against increasing income in the future 4 years.

Nan, EA in LA

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"Dave S" <drsjunk[at]hotmail.com> wrote:

- quote -

I'm not a tax pro, but do operate a very small business.

My understanding, which may not be exactly correct, is that
equipment that has an expected life substantially greater
than one year, often taken to mean 3 years or more, and that
has a significant initial cost, a number that seems to vary
between $500 and $5000 depending upon the organization,
should be considered Capital Equipment and the cost of this
equipment normally must depreciated over a number of years
instead of being deducted in the year it was first placed in
service. Section 179 gives you the choice to deduct the
cost of most types of Capital Equipment in the year it was
first placed in service instead of depreciating this
property, up to the Section 179 limits.

Items that have an expected life that is not substantially
greater than 1 year or a cost less than the capital
equipment limit set by your business are considered ordinary
business expenses and can be deducted in the year they were
first placed in service. These items can be classified a
Small Tools and Equipment or Office Equipment or similar
categories. I assume you cake pans would fall into this
category.

The net effect is that if the total value of the Capital
Equipment you purchase does not exceed the Section 179
limits, the full cost of all this equipment can be deducted
in the year it was first put in service.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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"Dave S" <drsjunk[at]hotmail.com> wrote

- quote -

Yes, they could be eligible for Section 179.

Now, they have to be used greater than 50% for business (so
watch the personal use, ok) and you should be aware that
Section 179 is generally limited to profits of the business
(no profits - no Section 179). This should be a good year
to find a local CPA or EA to guide (and prepare) your
returns. There are many intricacies to business portions of
returns that the average Joe might overlook.

--
Paul A. Thomas, CPA
Athens, Georgia

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My wife is starting a home baking business (LLC). Everywhere
I go to read what qualifies as Section 179 property seems to
simply quote the IRS definitions, especialy "machinery and
equipment".

What I would like to know is whether or not all the baking
equipment, e.g. cake pans, cake decorating equipment and
tools, will be eligible for Section 179 treatment?

Thanks.

Dave

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