Discussion:Sec 179 on Amended Return

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Discussion Forum Index --> Basic Tax Questions --> Sec 179 on Amended Return


Discussion Forum Index --> Tax Questions --> Sec 179 on Amended Return

FLAcct (talk|edits) said:

14 October 2009

I am amending a 2006 tax return which includes a Schedule C for a business that was purchased that year. The chain store tax preparer did not depreciate any of the tangible/intangible assets that were bought with the business, among many other errors. I have read the threads on Section 179 and just want to make sure my understanding is correct. I can not claim a Section 179 deduction on the 2006 amended return at this point. I would only have been able to claim the Section 179 on an amended return if the amended return was filed by the due date, plus extensions for the original return (in this case 4-15-07). Is this correct?

Harry Boscoe (talk|edits) said:

14 October 2009
I thought that the "original return" rule changed about four or maybe five years ago. Read the *current* IRS pubs and see if the "late" election is now allowed.

Jctmstx (talk|edits) said:

14 October 2009
The amended return must be filed within the time proscribed by law. See publ. 946.

Ddoshan (talk|edits) said:

14 October 2009
I believe you are too late. If the 2006 return was never filed in the first place then I believe you could take or use section 179.

Death&Taxes (talk|edits) said:

14 October 2009
You might read Reg. 1.179-5(a) regarding amendment possibilities.

FLAcct (talk|edits) said:

15 October 2009
From reading this Reg, I believe my original interpretation is correct. You can claim Sec 179 on an amended return but only if it is "filed within the time prescribed by law (including extensions) for filing the return for such taxable year". It does not say "within the time prescribed by law for filing the "amended" return. So I could only claim Sec 179 on a 2006 amended return if the amended return was filed by 4-15-07 or 10-15-07 if an extension was filed. Is this how you interpret this sentence?

R2 (talk|edits) said:

15 October 2009
No, not really. Reg 1.179-5(a) does not apply to the 2006 tax year. Instead, Reg. 1.179-5(c) applies. It is not too late to amend 2006 to claim Sec. 179.

R2 (talk|edits) said:

15 October 2009
I just realized that Tax Almanac's version of Reg 1.179-5(c) is out of date. I believe that it should read as follows:

(c) Section 179 property placed in service by the taxpayer in a taxable year beginning after 2002 and before 2008 —(1) In general. For any taxable year beginning after 2002 and before 2008, a taxpayer is permitted to make or revoke an election under section 179 without the consent of the Commissioner on an amended Federal tax return for that taxable year. This amended return must be filed within the time prescribed by law for filing an amended return for such taxable year.

Captcook (talk|edits) said:

15 October 2009
R2 is correct. If you file today, you can make the election to expense assets under §179 for a 2006 return.

Death&Taxes (talk|edits) said:

15 October 2009
What am I missing? A 2006 return was due 4/15/07, or 10/15/07 with extension. Wouldn't he have until 4/15/10?

FLAcct (talk|edits) said:

15 October 2009
Apparently the out of date Reg said that the amended return (with Sec 179 added) must be filed by the due date, plus extensions, of the original return. The new Reg apparently says the amended return (with Sec 179 added) can be filed until the regular deadline for filing an amended return. At least this is my understanding now.

Ddoshan (talk|edits) said:

15 October 2009
May have it all wrong but my understanding is ... 179 expense may be taken on an originally filed return including extensions for that tax year. If filing a 2006 return in 2009 fine, you may use 179. If you filed a 2006 return on time you would have until 10/15 of that year to amend your return to take or use Section 179.

If you filed your return on time for the 2006 tax year and did take or use Section 179 expense you could in a later year file an amended return revoking that election.

R2 (talk|edits) said:

15 October 2009
No, that is not quite right.


1. Sec. 179 may be claimed on the original or amended return for 2006. The original return need not be filed timely. The amended return must be filed within the normal 3-year limtations period specified in Sec. 6511.

2. The amended return can be filed within 3-years to either make an original Sec. 179 election or to increase the original elected amount.

Ddoshan (talk|edits) said:

15 October 2009
Maybe my post was not as clear as it could have been but I meant pretty much what you have said. I just thought that you must make the election to use Sec. 179 on an original return wether timely filed or not. But that you could only amend to take the Sec. 179 deduction on a timely filed return. But you could amend a return down the road to revoke the 179 election you took on a timely filed return.

This seems to be what that Regulation link 1.179-5 seems to say, at least to me. I guess I get confused easily.

Ddoshan (talk|edits) said:

15 October 2009
This is from Sec. 179.Org for whatever it is worth but it is as I understand it with one addition. That you can go back and amend a previous years return to revoke an election.

Extensions and Amended Returns

You may claim Section 179 deductions up to the due date (including extensions) for filing your taxes for the tax year you are claiming the deduction. This means that you are not allowed to claim Section 179 for previous tax years.

However, you MAY amend a current year return - for example, for tax year 2008, the maximum extended due date (with extensions) for filing is October 15, 2009. You file your 2008 return on Sept. 1, 2009 and then realize you didn't utilize the Section 179 deduction, you still have until the Oct. 15, 2009 deadline to file an amended tax return to claim the deduction. But you *cannot* go back and amend 2007's return and add Section 179 deductions (as that deadline passed 10/15/2008).

Ddoshan (talk|edits) said:

15 October 2009
After reading more it appears that it is Revenue Procedure 2008-54 that seems to have added confusion to expensing / amending in connection with Sec. 179. I no longer know what is proper or not proper.

Ddoshan (talk|edits) said:

15 October 2009
Furthur reading I see Section 7 of Rev. Pro. 2008-54 does allude to amending previous years returns in regards to 179 expensing.

R2 (talk|edits) said:

15 October 2009
Ddoshan, I believe that you are being confused by the 2002-2007 JGTTRA and AJAC rules (PL 108-27 and 108-357). Under the regulations, those rules basically apply to tax years 2003 through 2007. However, PL 111-5 (ARRA of 2009) appears to extend the JGTRRA and AJAC rules to tax years from 2008 through 2010. Accordingly, Rev Proc 2008-54 provides that the 1.179-5(c) regulations will be amended once again to incorporate the JGTRRA and AJAC rules for the tax years 2008 through 2010.

Thus, when 2011 finally arrives, the JGTRRA and AJAC rules will go away and we will go back to the old rules which say that any Sec. 179 election must be made on an original return (whether or not timely) or an amended return filed by the extended due date of the original return.

The bottom line is that under AJAC and JGTRRA, it is not too late to amend a 2006 return to elect or increase a Sec. 179 election. However, starting with the 2011 tax year, this will no longer be possible since we are going back to the old rules. Again, see the latest version of Reg 1.179-5(c) (as modified by Rev. Proc. 2008-54).

Death&Taxes (talk|edits) said:

16 October 2009
In my RIA there is this warning at the top of 1.179-5

"Caution: The Treasury has not yet amended Reg § 1.179-5 to reflect changes made by P.L. 110-28, P.L. 109-222, P.L. 108-357"

No wonder there is confusion.

I seem to recall someone explaining JGTTRA and AJAC as forms of audit protection. If the Service capitalized an expense, the taxpayer could amend and elect 179.


Jossiecpa (talk|edits) said:

12 June 2010
I have this exact situation - new client extended their 2006 tax return, but didn't file it until April 15, 2008 (6 months late). I noticed that they didn't Sec 179 any of their assets purchased in that year. Need to amend the return for other reasons, but would like to take Sec 179 on these assets as well. From what I have read above, please tell me if I am understanding correctly that I can amend this return and take the Sec 179, even though the return wasn't filed timely. If I am misunderstanding this, please let me know. Thanks.

Harry Boscoe (talk|edits) said:

12 June 2010
For a calendar year 2006 return, you had until 4/15/10 to amend your Section 179 choice, if you didn't get an extension for that 2006 return. If you got an extension, you've got until three years from the extended due date. That *might* be as late as October 15, 2010, or it might not.

This is my understanding. But I drink PBR. Who can you trust?

Reyesjoe (talk|edits) said:

13 June 2010
In a somewhat similar situation I have a new client whose tax preparer did not take bonus depreciation for her 2008 tax return (a new business). She came to me to prepare her 2009 and I asked her about the bonus depreciation. She knew nothing about it. From everything I've read it seems to me that we can amend her 2008 return for missed bonus depreciation. Am I correct? Thanks.

Kevinh5 (talk|edits) said:

13 June 2010
Make sure that there wasn't an election OUT of bonus depreciation. For most of my client's, we elected OUT because of the complications on the state return.

Reyesjoe (talk|edits) said:

13 June 2010
Kevin, I did see a document indicating an election out of bonus depn. Unfortunately my client doesn't know anything about it but it may just be she forgot this technical detail. Thanks!

Kevinh5 (talk|edits) said:

13 June 2010
if the return was prepared by good (non-consumer) tax software, then it should have computed bonus depreciation correctly unless an election OUT was made. Did the prior tax preparer use software? If so, assume that the election was made.

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