Welcome to Law-Forums.org!   

Advertisments:




Sponsor Links:

Discount Legal Forms
Discounted Legal Texts


Section 179

Discuss anything to do with property law - buying, selling property

Section 179

Postby Nerthach » Thu Dec 01, 2016 6:09 pm

s About Taxes)/section 179 Advertisement Expert: Richard Fritzler - 12/29/2008 I am a sub S corporation. I plow snow I work by myself, I also work a full time job. I am considering buying a new 2009 F250 with a plow for 36000.00 and finance it for 5 years, I understand I can claim this deduction using my income from my full time job if I don't have any income this year from plowing snow. If I have paid all my taxes required this year from my full time job will taking this deduction give me a tax return and if so approximately what percentage?

ANSWER: Section 179 is only available from the profit of the business, if you are not profitable you are not eligible.

You can buy a truck, finance it and deduct the interest. When it comes to depreciating the vehicle things are not as clear as the morning TV talk shows would have you believe.

If your business depreciates a vehicle, it is required to attribute the personal use of that vehicle to the individual that uses it personally as income. At 58.5 cents per mile that adds up quickly. You then have to pay taxes on that. You run the math and it quickly shows that depreciation of a vehicle is NOT a good tax plan. It would be okay if it was a dump truck or Semi and you normally didn't drive it to and from work, or to the grocery store, or the kids soccer games, or to go bowling, or . . . If on the other hand, you simply bought it as an investment, and kept it for a few years; then sold it in a year where your profits were high, you would be able to take the loss against a higher tax bracket.

Richard Fritzlerhttp://www.owelesstax.comhttp://www.nevadacorporateservices.com

phone 800 590-6612

---------- FOLLOW-UP ----------

Then is this statement misleading in paragraphs 3 and 4?

Deduction limited to taxable income

You have now determined the maximum deduction based on the amount of property purchased during the year. You now must pass the aggregate income hurdle.

Your deduction is limited to your aggregate taxable income from the active conduct of any trade or business. Active trade or business includes employee and spouse's wages, sole proprietorships, partnerships and S corporations. Basically, this means that unless you have other sources of business income, your Section 179 deduction can't create a taxable loss for your business.

More business owners are able to take advantage of the deduction when they combine their company earnings with those of a spouse or money earned in addition to(or before starting) their own company income.

For example, you are someone else's employee for most of the year. Your wages exceed the Section 179 deduction. You start your own business at the end of the year and purchase equipment and furniture. Even if your new business doesn't generate gross income that year, you can still take the Section 179 deduction on the new equipment and furniture. Why? Your wages exceed the Section 179 deduction.

This aspect of inclusion also applies to a spouse. For example, you earn annual wages of $60,000 as an employee. Your spouse doesn't work during the year but begins a new business at the end of the year. Your spouse purchases and places in service $15,000 of Section 179 property at the end of the year. Your spouse's business doesn't generate gross income at the end of the year. Even though your spouse hasn't earned trade or business income for the year, the Section 179 deduction of $15,000 is still allowed in full since your wages count as trade or business income.

Any amounts disallowed by the trade or business taxable income limit are carried over to the next year and added to the cost of any eligible property placed in service in that year. The same rules for maximum deduction, maximum annual investment and taxable income apply to the next tax year as well. .
Nerthach
 
Posts: 43
Joined: Wed Mar 05, 2014 1:20 pm

Section 179

Postby Dustyn » Fri Dec 02, 2016 6:59 am

I can't seem to find that passage on the IRS website. If you are taking the advice of a self proclaimed Tax Guru, he/she/they should be able to provide points and authorities to support their claim. I am not the expert on what they may be spouting(I mean offering).

As I tried to explain in the previous answer. Depreciating a vehicle is not good tax strategy. Even if you could, because whatever depreciation deduction you could claim would be more then offset by the personal mileage credit. Since you are operating as a S corp, you do not get many of the better deductions that can be available, and you do not enjoy the lower tax rate of a real corporation. So I can see why you are focused on trying to squeeze every last possible nickel out of the taxes you pay. But if you are looking for real benefits, then we have more discussion ahead.

Here is what the IRS says:(note the last part that specifically address vehicles). 2008 Changes

Increased Section 179 limits. The maximum section 179 deduction you can elect for qualified section 179 property you placed in service in tax years that begin in 2008 has increased to $250,000($285,000 for qualified enterprise zone property and qualified renewal community property). This limit is reduced by the amount by which the cost of section 179 property placed in service in the tax year exceeds $800,000. For qualified section 179 Gulf Opportunity(GO) Zone property placed in service in certain counties and parishes of the GO Zone, the maximum deduction is higher than the deduction for most section 179 property.

Special depreciation allowance for certain property. You may be able to take an additional first year special depreciation allowance for certain qualified property(defined below). The allowance is an additional deduction of 50% of the property’s depreciable basis(after any section 179 deduction and before figuring your regular depreciation deduction).

Property that qualifies for this special depreciation allowance include the following.

Tangible property depreciated under the modified accelerated cost recovery system(MACRS) with a recovery period of 20 years or less Water utitiliy property Off-the-shelf computer software Qualified leasehold improvement property Qualified property must also meet all of the following tests.

You must have acquired qualified property by purchase after December 31, 2007, and before January 1, 2009. If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. Qualified property must be placed in service after December 31, 2007, and before January 1, 2009(before January 1, 2010, for certain transportation property and certain property with a long production period). The original use of the property must begin with you after December 31, 2007. Property that does not qualify for special depreciation allowance include the following.

Property placed in service and disposed of in the same tax year. Property converted from business use to personal use in the same tax year it is acquired. Property converted from personal use to business use in the same or later tax year may be Depreciation limits on business qualified GO Zone property. Property required to be depreciated under the alternative depreciation system(ADS). Property included in a class of property for which you elected not to claim the special depreciation allowance.vehicles Depreciation limits on business vehicles. The total depreciation deduction(including the section 179 deduction) you can take for a passenger automobile(that is not a truck or a van) you use in your business and first placed in service in 2008 is $2,960($10,960 for automobiles for which the special depreciation allowances applies). The maximum deduction you can take for a truck or a van you use in your business and first placed in service in 2008 is $3,160($11,160 for trucks or vans for which the special depreciation allowance applies).     Caution. These limits are reduced if the business use of the vehicle is less than 100%  
Dustyn
 
Posts: 44
Joined: Sun Feb 23, 2014 11:00 am

Section 179

Postby Tolman » Tue Dec 13, 2016 6:37 pm

s About Taxes)/section 179 Advertisement Expert: Richard Fritzler - 12/29/2008 I am a sub S corporation. I plow snow I work by myself, I also work a full time job. I am considering buying a new 2009 F250 with a plow for 36000.00 and finance it for 5 years, I understand I can claim this deduction using my income from my full time job if I don't have any income this year from plowing snow. If I have paid all my taxes required this year from my full time job will taking this deduction give me a tax return and if so approximately what percentage?

ANSWER: Section 179 is only available from the profit of the business, if you are not profitable you are not eligible.

You can buy a truck, finance it and deduct the interest. When it comes to depreciating the vehicle things are not as clear as the morning TV talk shows would have you believe.

If your business depreciates a vehicle, it is required to attribute the personal use of that vehicle to the individual that uses it personally as income. At 58.5 cents per mile that adds up quickly. You then have to pay taxes on that. You run the math and it quickly shows that depreciation of a vehicle is NOT a good tax plan. It would be okay if it was a dump truck or Semi and you normally didn't drive it to and from work, or to the grocery store, or the kids soccer games, or to go bowling, or . . . If on the other hand, you simply bought it as an investment, and kept it for a few years; then sold it in a year where your profits were high, you would be able to take the loss against a higher tax bracket.

Richard Fritzlerhttp://www.owelesstax.comhttp://www.nevadacorporateservices.com

phone 800 590-6612

---------- FOLLOW-UP ----------

Then is this statement misleading in paragraphs 3 and 4?

Deduction limited to taxable income

You have now determined the maximum deduction based on the amount of property purchased during the year. You now must pass the aggregate income hurdle.

Your deduction is limited to your aggregate taxable income from the active conduct of any trade or business. Active trade or business includes employee and spouse's wages, sole proprietorships, partnerships and S corporations. Basically, this means that unless you have other sources of business income, your Section 179 deduction can't create a taxable loss for your business.

More business owners are able to take advantage of the deduction when they combine their company earnings with those of a spouse or money earned in addition to(or before starting) their own company income.

For example, you are someone else's employee for most of the year. Your wages exceed the Section 179 deduction. You start your own business at the end of the year and purchase equipment and furniture. Even if your new business doesn't generate gross income that year, you can still take the Section 179 deduction on the new equipment and furniture. Why? Your wages exceed the Section 179 deduction.

This aspect of inclusion also applies to a spouse. For example, you earn annual wages of $60,000 as an employee. Your spouse doesn't work during the year but begins a new business at the end of the year. Your spouse purchases and places in service $15,000 of Section 179 property at the end of the year. Your spouse's business doesn't generate gross income at the end of the year. Even though your spouse hasn't earned trade or business income for the year, the Section 179 deduction of $15,000 is still allowed in full since your wages count as trade or business income.

Any amounts disallowed by the trade or business taxable income limit are carried over to the next year and added to the cost of any eligible property placed in service in that year. The same rules for maximum deduction, maximum annual investment and taxable income apply to the next tax year as well. .
Tolman
 
Posts: 57
Joined: Tue Jan 07, 2014 10:24 am


Return to Property Law

 


  • Related topics
    Replies
    Views
    Last post
cron