Discussion:Another 179 Question
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| 28 September 2006 | |
| Client personally acquires commercial property in which to locate his C corp. Purchase price includes allocation of $30k to an overhead crane (runs on rails on top of the walls of the shop). Corp leases building from stockholder. Is the OH crane eligible for Sec179 depreciation on the stockholder's Sched E? BTW, the crane was considered taxable boot in 1031 exchange. | |
| 28 September 2006 | |
| I don't think you're going to get anything but votes JD. We did decide (Except for Wes) that §179 was available for scommercial rental. How attached to the building is it? If the corp bought and installed the crane I would say yes. | |
| 28 September 2006 | |
| Hi JD off the top rental of commercial bdlg doesnt qualify as an active T or B eligible for 179. Maybe some of the lifers :) can think of a rent the crane separately and that may work but I havent looked at it. bye | |
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| 28 September 2006 | |
| hi JD I love being the rebel so I looked quick. Dennis corp did not buy shhr did as part of building separately allocated. Sec. 179(d)(5) doesnt allow 179 to noncorporate lessors so start there no more time see you tomorrow. bye | |
| September 28, 2006 | |
| Agree with Wes. If the corp bought it, that's one thing. Since the S/H /Lessor did, no deal. | |
| 28 September 2006 | |
| All I said was the situation was a lot more clear if Corp bought the thing. (d)(5) is easy enough to get around. My problem is it doesn't seem that much different than an elevator, and I do hate to see it go at 39 years. | |
| 29 September 2006 | |
| Yeah, this is the question we beat up pretty thoroughly last spring. Discussion:Partner Section 179 Expense Deduction
BTW, Wes, your capitalization and punctuation have improved so much since then. :) The difficulty I am having with it not being 179 property is that the corporation, wholly-owned by the client, is a manufacturer. The client purchased a building specifically to move his manufacturing operation to. The building, and the crane installed therein, is leased to the corporation, of which the client is a full-time employee and actively involved in the daily operation of the business. The corporation consumes probably 80% - 90% of the facility, with only a small office space that is rented out to an unrelated tenant. Sec179(d)(3) restricts 179 deduction to the net income from a trade or business. Sec179(d)(1)(C) requires the asset to be purchased for use in an active trade or business. It seems to me this Sch E transaction is just a continuation of the active TB already being conducted by the owner. If the client had purchased the crane as an employee and stuck it onto a 2106 it would have been deductible against wages paid. If the client had purchased the crane in a new business venture with minimal revenues, the wages paid from another job would have constituted TB income from which the crane could have been deducted on a separate Sch C. Am I whining too much? Wes, tell me this is the one and only time you agree that the rental activity constitutes a TB such that Sec179 would be allowed. | |
| 29 September 2006 | |
| I thought we determined that all rentals were trade or business with a specific exemption from SE Tax. My problem is that the crane came with and is attached to the building but if the corp and bought and installed it I can't see leasehold improvement. (d)(5) would only seem to apply to a situation where the crane was being treated separately from the building. | |
| 29 September 2006 | |
Good morning JD, you are whining too much. Sorry I disagree with the rental T or B issue in 30 years of work and seminars no one has ever said a non corporate lessor can take 179 and I never have (179(d)(5)). The crane was part of the building purchase and you can depreciate it separately as agressively as you want but not all at once. You cannot get around it.
You guys have really taught me how to type. Except solomon likes to go in and do my links. Havent figured that out yet. bye | |
| September 29, 2006 | |
| Linking to Code and Regulation sections is fairly easy:
Simply type either "Sec." or "Reg." followed by the section number, and put that between two square bracket characters, like this:
- Tim Doyle, TaxAlmanac Moderator - Talk to me 07:36, 29 September 2006 (CDT) | |
| September 29, 2006 | |
| Not a problem Wes - we love that you're helping others by answering questions! Don't feel you need to add links, but I wanted you and others to know how to do it in case you wanted to try.
- Tim Doyle, TaxAlmanac Moderator - Talk to me 07:40, 29 September 2006 (CDT) | |
| 29 September 2006 | |
| The definition of rental real estate as an active trade or business came from the Senate Finance Committee.
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