Tax Guru – Ker$tetter Letter

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Sec. 179 & Date Placed Into Service

Posted by taxguru on December 11, 2007


Got this address on the internet……..I have a general question
Would really appreciate an answer.
I have a C Corp……restaurant biz…….I am planning  on buying some big kitchen equipment……..and I can buy it in Dec 2007
Is there any reason I can’t pay for it and then Section 179 the depreciation in order to  offset some profit………even if I am not yet using the equipment..



As your own personal professional tax advisor should have told you, the Section 179 law is very specific about the new equipment needing to be purchased and placed into service during the tax year.  Just prepaying for something and not actually using it in your business until the next year will not fly.  Any salesperson who told you otherwise is blowing smoke up your ass and cares more about his/her commission than being honest.

The good thing is that when during the year the items are placed into service isn’t relevant.  Starting to use a new piece of equipment on December 31 is just as good for the Section 179 eligibility as any other date during the year, assuming a calendar tax year.

Get with your personal professional tax advisor and s/he should be able to give you other ideas on how to smooth out your income before the end of your tax year.  There are plenty of perfectly legal ways to bleed out corporate profits without having to cheat on Section 179.

If you don’t have a professional tax advisor helping you with your business, you are in very dangerous territory and you need to start working with one pronto before you do any more damage to yourself.

Good luck.

Kerry Kerstetter


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