Discussion:Section 179 Not Taken
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Section 179 Not Taken
| 20 September 2006 | |
| Client recently had 1120S filed by a local CPA. She has asked me to review it as the CPA didn't give her any real info or advice. I perceive there is a communication problem between these two ladies. Anyway, as I start to tie out the tax return to the TB and income statement I notice there was no Section 179 deduction taken for last year. Before I venture into uncharted waters, would there be a specific reason not to take a 179 deduction. Company had over $100,000 in net profit per the return and shown on the K-1. This is a great forum to get these kind of responses. Thanks. | |
Bottom Line (talk|edits) said: | 20 September 2006 |
| Once in a while I will not take section 179 IF (Big IF) I expect a significant increase in taxable income in the following years. Since they made a lot of money last year, this does not seem to be the case. Unfortunately, there's nothing you can do about it now except use it as a marketing tool. | |
Mtmckeecpa (talk|edits) said: | 20 September 2006 |
| B6,
Check out Reg 1.179-5(c)...I believe that you can amend this 1120s and pickup that 179 deduction. In addition to what BL said, although you don't state this but maybe (a big maybe) this client had another S corp where they already used the 179 deduction to the max. Funny thing is, I have a 1040 client, minority shareholder in an S Corp,...the preparer screwed up the 179 deduction for '05 to the tune of $90k and they have 'em on the accrual method, can be on cash, which would drop another $80k off the tax return and the majority owner is just, well, not interested in making a change at this time...Jeez. | |
Michaelstar (talk|edits) said: | 20 September 2006 |
| Without additional information, I can see no reason to not have taken the sec 179 deduction. Certainly would depend on the t/p's 1040 as that is where the deduction will flow. You may amend the 2004 tax return (1120s / then the 1040) and elect to take the sec 179 deduction if it would be worth the deduction and the taxes saved vs the fees for the work. In the end, it will be your call. | |
| September 20, 2006 | |
| Maybe a CPA who bills by the moment and likes keep excruiatingly long depreciation schedules so that he has more to do that serves no purpose other than busy work and his billing.... | |
Death&Taxes (talk|edits) said: | 20 September 2006 |
| And you must be sure the assets qualify for 179....that is, that they were not placed in service by one of the shareholders prior. To be properly cynical, I had a cellist who sold her instrument to a corporation and then claimed to have bought a new cello. Turned out the corporation was owned by her husband, and I never could get a straight answer as to whether it was the same instrument so I asked her to go elsewhere. With instruments that only increase in value, churning can be a national pasttime. | |
| September 20, 2006 | |
| OOOOOHHHH! A Biz opportunity...churning musical instruments. Hmmmm..... | |
| 20 September 2006 | |
| What's the difference between a cello and a violin? Ans: The cello burns longer. :)
And, JR, lighten up, okay, we all need to make a living. :) | |
| September 20, 2006 | |
| Then just bill more, doesn't mean you have to work harder!! :) | |
Mtmckeecpa (talk|edits) said: | 20 September 2006 |
| Work 1, Charge 2, Bill 3 | |
Death&Taxes (talk|edits) said: | 20 September 2006 |
| To this day I will remember the joy I had asking the cellist, and her husband who had sat with a smug file on his face, to find another preparer....they were filing separately also. And this was back when the limit was 10,000. Knit 1, Churn 2. | |
| 20 September 2006 | |
| One questions you may consider asking the client is if she plans on selling the asset or assets in the next couple of years. That may have been a factor in the decision. If these two people really don't communicate well, expaining the recapture of depreciation expense could be difficult. | |
