Discussion:Section 179 loss
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Discussion Forum Index --> Tax Questions --> Section 179 loss
| 18 August 2006 | |
| I have a Computer that cost $6000. I expensed the entire cost to 179.
I have calculated what the MACRS depreciation would be (4618). I have computed the would be basis as $1382 (6000-4618. I am selling this computer for $1000. Is this a loss of 382 with no 1245 or 179 recapture? Should I recaputure 1382 as 1245, 179 or nothing and just record the loss of 382 as longterm? tianaj@comcast.net | |
| 18 August 2006 | |
| My recollection is that for listed property the recapture is the excess over straight line. $2400 recapture...$1400 loss. It helps to look at these things logically. You wrote off $6,000 and got $1,000 back. | |
| 18 August 2006 | |
| If I'm not mistaken, all depreciation would be recaptured as ordinary income limited to gain on sale. In this case, basis would be zero, so gain would be $1000. What Tianaj is describing looks like rules for recapture when use falls below 50% on listed property? | |
| 18 August 2006 | |
| Tinaj, the Sec. 179 recapture rules generally apply to most dispositions of Sec. 179 property before the expiration of the MACRS life. However, the Sec. 179 recapture rules do not apply if the Sec. 1245 recapture rules apply to the same transaction. In this case, only a $1,000 Sec. 1245 gain is reportable (ordinary income). | |
| 18 August 2006 | |
| The point is the $1,000 is all ยง179 recapture, which may or may not be ordinary income depending on actual treatment on shareholder's return. I always hate to disagree with Riley, but situation could exist where deduction could still be suspended at shareholder level even after sale. | |
| 18 August 2006 | |
| Dennis, I am in complete agreement that the listed property recapture rules override the Sec. 179 recapture rules. However, I made an assumption that this computer was a used 100% for business purposes at a business establishment and would not be listed property. (Sure, I never take my laptop home with me). I also assumed that Tinaj has no Sec. 179 carryover. | |
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