Q:

Keri

Would the assets purchased in a business sale qualify for sec 179 dpn in 2010?

A:

If the amount of the purchase price allocated to the equipment is clearly stated and agreed on by both sides of the transaction, those assets should be set up on the purchaser’s deprecation schedule and depreciated in the same manner as if they had been purchased on their own.

In regard to qualifying for Section 179, the same restrictions as always would apply, including the business’s net income, the amount of total qualifying equipment acquired during the year and the relationship to the seller.  If the seller was a related party to the buyer, you would need to be careful in properly handling the values assigned to the equipment.

Good luck. I hope this helps.

Kerry Kerstetter

Follow-Up:

Thanks for confirming my thoughts.

San Francisco’s Proposed Booze Tax Has Businesses Up in Arms –  Typical Left Coast thinking, where the answer to every question is more taxes.  Supposedly it’s no big deal at a few cents per item.  However, with dozens and dozens of such “minor” taxes, it adds up to real money.

Your payroll taxes go into bottomless hole –  That’s how Ponzi schemes function.

Ebay, Adobe, EA Games, Many Others Leaving California For Utah Over Confiscatory Tax Rate –  It’s great to see that more and more companies are refusing to just continue bending over and letting the socialist rulers in Sacramento rape them fiscally.

Some employers steal from 401(k) plans –  Some common sense tips to make sure your money is in the proper place.  Of course, this only applies to private retirement plans because there is no way to ensure that your Social Security money is invested securely.  That money is routinely stolen and spent on idiotic things by our corrupt rulers in DC; and there is nothing that you can do about that. 

Gold Coin Sellers Angered by New Tax Law –  There appears to be a growing awareness and resentment to the upcoming requirement to file 1099 forms for many more kinds of transactions than are currently under the rules.  Hopefully, this idiotic rule will be repealed before it takes effect on January 1, 2012.

Neal Boortz had an excellent rant on this issue in his Nuze yesterday.

Americans Voting with their Feet – Renouncing American citizenship is an extreme way to save taxes, but everyone has their breaking point. 

Both parties mull raising retirement age – Just one more illustration of what a scam Social Security is. If a private company were to sell investors a retirement package where the rules could be altered after the fact in order to decrease the odds of receiving anything back, those folks would be in the slammer for fraud. Our elected rulers are allowed to do these fraudulent things over and over and are treated as royalty.

Fouled by the taxman – LeBron James is going to be savings millions in State income taxes by having his tax home in Florida instead of a taxable State.  Very wise move.

The Bush Tax Cuts and the Deficit Myth – The lefty lies and propaganda in regard to this will continue to heat up as the expiration date nears. Anyone with any common sense can tell that the deficit has everything to do with the out of control insane unconstitutional spending spree our rulers are on and nothing to do with the lower tax rates Bush signed into law. In fact, the deficits would be even worse if the cuts were not in effect, as will be seen again if they do expire. Taxable economic activity will slow down considerably if the government is allowed to steal an even higher percentage of everything.

Man tries to pay tax with 200,000 pennies – This story from Canada is amusing.  While this taxpayer was shut down by a Canadian law limiting the use of pennies to 25 at a time, it brings up a concept I have discussed frequently.  It has long been my contention that people aren’t as worked up as they should be over their true tax burdens because their payment is relatively painless through the insidious use of withholdings.  Out of sight, out of mind.  People need to feel the pain more directly.  If every person were required to pay his taxes directly by writing checks, or better still, counting out one dollar bills in front of the tax collector, they would feel the impact much more.  Counting out pennies would be even more painful to deal with.

Top Republicans want all tax cuts extended – We can only hope that the GOP is growing a spine and will fight to the max for this.

IRS starts mopping up Congress’s tax-reporting mess

Tax report rehashes debate over cost effectiveness of healthcare reform law

Health-care law may pose challenges for IRS, taxpayers –  Well, duh. Understatement of the day.

CPA Disbarred for Failure to Exercise Due Diligence and Compliance Problems –  This IRS announcement is an important reminder that the numbers need to match when shifting income between a corporation and its owners. 

I don’t know all of the details of this case, but it seems obvious that some taxpayers were audited and it was discovered that they hadn’t reported all of the income they had taken out of their corp.  Of course, their response was to blame their tax preparer, Gainesville Florida CPA Tim Kaskey.  Kaskey might have been able to claim innocence in this case if someone else had prepared the corp income tax returns.  However he had prepared the corp tax returns and could very easily see how much money the owners had taken out of the corp as deductible compensation.  I can therefore see how IRS would have a good case in holding him partially responsible for the erroneous 1040 and hit him with preparer penalties.  Disbarring him from practice seems a bit extreme of a punishment, unless they also discovered a pattern of similar situations with other clients he worked on. 

I have no idea whether this was an intentional attempt to defraud by the shareholders or the accidental consequence of sloppy bookkeeping.  It is a perfect example of why I have always insisted that every corp client I work with has its accounting kept with QuickBooks so that we have detailed records of all payments made to the owners.  It is one of my normal procedures when preparing the owners’ 1040s to examine the corp payments for the calendar year and make sure we are reporting the exact same totals on the 1040.  I do often find differences between the figures on the corp and personal books and have to scold the clients to be more careful with their postings.  I always adjust the personal figures to match what was reported on the corp tax returns and then we have no problems with IRS.  

Six Months to Go Until The Largest Tax Hikes in History

The Obama Tax Trap. How some Republicans are preparing to walk right into it.

How the New Wealth Taxes Will Hit You

Rising dividend taxes

Take Some Profits, Before the Tax Man Takes ‘Em

Short-run tax hikes being used to fill gaps – and we all know how often “temporary” taxes are allowed to actually expire.

Plastic Bags: Untapped Tax Gold Mine? – They’re actually calling the five cents per bag tax a “sin tax” because it’s considered a sin by DemonRats to buy things at a time when they are trying to destroy our economic system.