mmurrell wrote:
- quote -

If no depreciation was taken in year of purchase, rather the first year
item placed in service as we all know, then no section 179 is
applicable and you need to retroactively reconstruct macrs depreciation
for first and subsequent years. Whether or not client will choose to
amend to follow your reconstructions is solely up to client of course,
however for 2007, your first year of preparation, just start using the
correct depreciation from this day forward. Now I THINK I understood
what you said correctly.


- quote -

YOu are correct .

- quote -

OH, out of sequence here, but see above.

- quote -

Buying and selling is correctly a business and reportable on the
business tax return, be it schedule c, 1065, 1120, etc etc.

And here I thought that "I" had seen everything! (grin

ChEAr$,
Harlan Lunsford, EA n LA

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Hello to all,

A local tax preparer unexpectedly passed away a few months ago, and I
have received several clients from this sad event. His returns are
hand written, and the late preparer has done a couple of things I just
want to run by you.

In all the returns I received, the preparer has taken Section 179
expenses only (no depreciation). However, he may NOT take the S179 in
the year of purchase, or he make take a little bit in the year of
purchase, none the next year, and then the balance in the third year.
(There was income left in the return each of these years, and he would
show the remaining basis in the asset as a S179 "carry forward" in
later years) The client explained that the preparer told them he
could save the S179 expensing for what years helped them the most.

I have never seen this before, and have always thought you could take
S179 (within limits) only in the year of purchase, and depreciate the
balance (if any) over the appropriate recovery period. No skipping
years, and no picking S179 dollar amounts after the year of purchase.

How would you handle this on the new client's 2007 return?

The other item I would like to run by you is a situation where the
taxpayer bought and sold pipe. (Oil Field). The taxpayer claims he
has the pipe sold before he buys it. For example through his contacts
he learns that "Buyer" is looking for some pipe and is willing to pay
$X. The taxpayer then finds the pipe for less than $X at "Seller" and
moves the pipe from "Seller" to "Buyer" and keeps the profit. This
happened in the three returns I looked at (2004, 2005 & 2006). Each
time this was reported on form 4797 Part II "Ordinary Gains and
Losses"

This seems to me it should be showing on Schedule "C" and self
employment taxes being paid. Any thoughts?

Thank You.....Marie

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >