UPDATE: 12/11/2014 Spoke to Senator Nelsons’ office in DC. They do expect Tax Extenders bill to be voted on this week. No exact date and time set yet. Stay tuned. Defense bill took priority today.
Tax Extenders which includes Section 179 and allows for equipment/property to depreciated in 2014, is expected to be voted on at any time. Seems there is far more important items on the agenda than a bill that could help the 75% of small businesses that help employee 75% of the people in this country. Sales are slow while buyers and sellers wait to see if this will be voted on to increase Section 179 to it’s limit of $500,000, for the much needed tax breaks for everyone from farmers to IT companies. AG Web news which is following this daily for farmers, dairy and other food processors is lobbying the Senators hard to pass the bill. All expectations is it will pass and the President will vote yes. Yet time is running out so perhaps you could pick up your phone and call your Senator and demand they vote now and they vote yet to spur the economy and help us local businesses grow by securing equipment and property that will help us expand to earn more income.
For more information on Section 179 or how it applies with leasing or loans please contact email@example.com
An article by Joe Kristan sums up the current state the Tax Extenders bill which includes Section 179. He points out it is not enough just to buy equipment you must put in service according to the IRS. So don’t wait till Dec 31 to buy.
Tax Roundup, 12/10/14: Extender bill lives, permanent charitable extender bill doesn’t. And: don’t just buy it; install it!
December 10th, 2014 by Joe Kristan
On December 30, 2003, an insurance salesman named Michael Brown1 took ownership of a $22 million plane in Portland, Oregon. He flew from there to Seattle to Chicago — he says for business meetings — and then back to Portland. Brown says these flights put the plane in service in 2003, and entitle him to a giant bonus-depreciation allowance. But a few days later he had the plane flown to a plant in Illinois where it underwent additional modifications that were completed about a month later.
The IRS argued that the need for modifications meant the airplane wasn’t “placed in service” before year end. The taxpayer argued that the airplane was “fully functional” as purchased, and therefore was “placed in service” when acquired and used for its first flight on December 30, 2003. The court agreed with the IRS:
While acknowledging in his briefs that those modifications made the Challenger “more valuable to him” and allowed him to “more comfortably conduct business” as a passenger, he says they have “nothing to do with the Challenger’s assigned function of transporting him for his business.” The problem is that this posttrial framing just doesn’t square with the trial testimony, in which Brown testified that those two modifications were “needed” and “required”. We therefore find that the Challenger simply was not available for its intended use on a regular basis until those modifications were installed in 2004. Brown thus didn’t place the Challenger in service in 2003 and can’t take bonus depreciation on it that year.
A new asset doesn’t actually have to be used during the year to be “placed in service,” but it has to be ready to go. A new machine should be on the floor and hooked up, not just in a crate on the dock, or in a trailer on the way in, if you want to depreciate it. If the new asset is a vehicle, you need to take delivery to get the deduction. If the asset is a farm building, it needs to be assembled and in place, not in boxes on the ground. Cite: Brown, T.C. Memo 2013-275