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Sec. 179 assets have to be used in the USA

Posted by taxguru on August 17, 2011

Q:

Subject: Foreign assets and sect 179

I saw your informative web page concerning 179 property.

Where are foreign assets carved out from its application?

 

A:

From the IRC on TheTaxLibrary:

§ 179(d) Definitions and special rules

§ 179(d)(1) Section 179 property

For purposes of this section, the term “section 179 property” means property—
§ 179(d)(1)(A) which is—

§ 179(d)(1)(A)(i) tangible property (to which section 168 applies), or
§ 179(d)(1)(A)(ii) computer software (as defined in section 197 (e)(3)(B)) which is described in section 197 (e)(3)(A)(i), to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2013,
§ 179(d)(1)(B) which is section 1245 property (as defined in section 1245 (a)(3)), and
§ 179(d)(1)(C) which is acquired by purchase for use in the active conduct of a trade or business.
Such term shall not include any property described in section 50 (b) and shall not include air conditioning or heating units.

§ 50(b) Certain property not eligible

No credit shall be determined under this subpart with respect to—

§ 50(b)(1) Property used outside United States

§ 50(b)(1)(A) In general

Except as provided in subparagraph (B), no credit shall be determined under this subpart with respect to any property which is used predominantly outside the United States.

From Page 9-15 of TheTaxBook:

Other nonqualifying property:

• Air conditioning or heating units.

• Property used predominantly outside the United States, except property described in IRC Section 168(g)(4).

 

From Page 17 of IRS Publication 946:

Excepted Property

Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property.

· Certain property you lease to others (if you are a noncorporate lessor).

· Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging.

· Air conditioning or heating units. 

· Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code.

I hope this helps.

Kerry Kerstetter

 

 

Follow-Up:

Thank you VERY much. I blew right by section 50. I had seen Pub 946. I don't believe I have ever laid eyes on section 50.

 

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