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Discussion Forum Index --> Tax Questions --> Short tax year
DR BRISKET (talk|edits) said:
| 7 March 2006
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| I am working with a new LLC client (husband and wife) who purchased a self-storage rental business last year. Operations began on 9/1/05. After buying the business, they purchased a couple of other assets over $1,000 in cost. Does depreciation on the initial purchase ($135,000) plus the other assets have to be figured using "short tax year" rules?
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HPTAX (talk|edits) said:
| 8 March 2006
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| Don't know enough to give you the answer, but if you are using MACRS the answer is yes. Pub 946 has the highlights.
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Jdugancpa (talk|edits) said:
| 8 March 2006
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| Yes, short year rules apply. However, a full Section 179 deduction is still allowed, not reduced by the short year rules. In community property states, the IRS will allow a husband-wife "partnership" to be reported either on a 1065 or a schedule C. If it is reported on a Schedule C, any wages or other earnings the couple has would be able to be used to allow Section 179 depreciation, even if there is no taxable income from the Schedule C itself.
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DR BRISKET (talk|edits) said:
| 8 March 2006
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| Thanks for the input. Unfortunately, my client is not in a community property state. Also, they had a net loss without any depreciation, so the Section 179 deduction will not apply. I was amazed at the difference in total depreciation between regular MACRS and what is allowed using the short tax year rules. In this particular case, the short tax year depreciation is not really going to hurt my client. And, they will get a very generous 2006 depreciation deduction, particularly from the storage rental units.
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WPCPA (talk|edits) said:
| 5 April 2008
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| Have you considered Cost Segregation for this Client?
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Jdugancpa (talk|edits) said:
| 5 April 2008
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| WP, your kind of a day late and a dollar short with this advice. Please observe the OP date.
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Belle (talk|edits) said:
| April 6, 2008
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| Wasn't this guy evicted a few months ago?
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Kevinh5 (talk|edits) said:
| 15 July 2008
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| Geever changed his screen name and got back in. He is being watched now, though, as his actions are still suspect.
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