Q:

Subject: plagarism

Kerry,

Dont know if this concerns you or not but it looks like your site is being plagarized word for word here:

http://www.groco.com/readingroom/sec179_businessequipment.aspx

Anyway I was sending you this email cause I wanted to know if you could provide me a site to prove that section 179 can apply to used items as long as they are “new to you.” Look at the code and regs and cannot seem to find anything. Thanks.

A:

Since I created that page on Section 179 from scratch, with the occasional update for new developments, I am flattered that other tax pros want to use it.  I am aware of others on the web who have made use of my info, but they generally give me credit as the author.  Obviously, not everyone has the same good manners.  This copy that you found was obviously made several months ago because it doesn’t include some of the updates I have made to my page.

In regard to the issue of whether used equipment can be expensed under Section 179, I guess the fact that I have been claiming that on thousands of clients tax returns since Section 179 was born, with zero problems from IRS, isn’t adequate substantiation for you.

Oftentimes in interpreting laws, it isn’t whether every single item allowed is spelled out; but whether or not something is specifically designated as not being allowable.

If you check IRS Publication 946 under the Eligible Property heading, you will not see one mention of any requirement that it be brand new or that the taxpayer be the first owner.

Similarly, under the heading “Excepted Property” nowhere does it include any mention of an  item that is not brand new.

From QuickFinder Online:

   “It must have been acquired by purchase from an unrelated party.”

There is no mention anywhere of any requirement that the asset be brand new.

A similar review of the Section 179 discussion in The TaxBook reveals not a single mention of a requirement that the asset be brand new.

Good luck.  I hope this helps.

Kerry Kerstetter

Q:

Subject: SECTION 179 QUESTION

Hi Kerry,

 

I read your section recently and was wondering if you could answer a question for me? I purchased a milling machine new in 2006 for 72,000. rigging and taxes pushed the expenditure to 78,000. I would like to sell the machine in 2007,probably in march. Under section 179, How much can I depreciate the machine? I will probably sell the machine for 60,000. Things just didn’t quite work out.

 

Hopefully this makes sense, Thanks for your help.

 

Cheers,

A:

How much you can legally claim for Section 179 on your 2006 1040 and how much you should claim may very well be two completely different numbers.  You should work out different scenarios with your personal professional tax advisor as s/he works on your 2006 tax returns. 

Basically, any amount you claim in Section 179 and normal depreciation on the machine in excess of $18,000 will end up being taxable recapture income on your 2007 tax return.  This may not necessarily be a bad thing because it could very easily be the case that you could save more on your 2006 taxes by claiming a lot of Section 179 than the taxes you will have to repay on your 2007 1040, in addition to the time value of the one year difference in tax dates. 

I have no way of knowing if that would be the case because it depends on so many other factors that only your professional tax preparer can know about.  That is the kind of “what-if” analysis you and your professional tax advisor need to do before completing your 2006 1040.

Good luck.

Kerry Kerstetter

Follow-Up:

Hi Kerry,

 

Thank you for the explanation, I appreciate your input very much.

 

Best Wishes,