Discussion Archives:Dealing with a prior year 179 expense

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Advanced Tax Questions --> Dealing with a prior year 179 expense

Discussion Forum Index --> Tax Questions --> Dealing with a prior year 179 expense

Cottcpa (talk|edits) said:

21 March 2009
Taxpayer took 179 on a vehicle for tax year 2006 - 179 election made at the S-Corp level and passed through on K-1. Note that the vehicle was owned by taxpayer's father, but the taxpayer paid the note (I presume that is how the prior CPA justified the election on the taxpayer's 1120-S).

Taxpayer wrecked the vehicle in January, 2007 - insurance proceeds went to the father in the amount of the note. From Jan 2007 to May 2008, taxpayer used his relative's truck. In May 2008 he purchased a new Tahoe.

In mid-2007 taxpayer also changed his trade or business. In 2006 he was self employed and operating as an S-Corporation. In mid-2007 he became an employee in an unrelated trade or business, although he did use the loaned vehicle, and then the Tahoe, at approximately 90% for employment purposes.

So he purchased replacement property before 12/31/09; but the new Tahoe is used in an unrelated trade or business. Everything else constant, does the change of trade or business mitigate non-recognition under 1033? Even if so, does 280F come into play?

Just trying to determine the best way to handle this. Recall that there is some question as for whether Sec 179 was allowable for this taxpayer in 2006, so amending 2006 to revoke the election is possibly a consideration????

Personal tools