Question

179 from a purchase previous year

Forum|Forum|3 years ago
December 16, 2022
1 reply
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Under the assets section of my tax software for my self employment I am entering a $7500 purchase. The software asks WHEN it was purchased. Understandably for assets and depreciation, a previous year makes sense. But even though I enter the year prior to the tax year, It's still suggesting I take a full or partial 179 deduction. Am I missing something that allows that?

M

Mike9241

what year was it placed in service? that's the year for the 179. of course we can't see what you've done or even know what year you're working on (online is only for 2022) and of course many aspects of the 2022 app may not be up to date. some updates may not come through until January.

M

Mike92ctAuthor

Well, to not enter further confusion, let me think of an example..

Lets say a $7,500 purchase was made on 12/25/2021. A business was started on 01/01/2022.

Let's say there was no business or mention of asset on the 2021 taxes (wouldn't be.. business started 2022)

So in that example, what options are to the then compare the tax advantages. Is 179 available for this item previous year, but placed in service beginning on next year, but only few days later, or is depreciation only available, spread over 5 years. Or combination of the two..

Rick19744

Employee

Based on your facts:

Keep in mind you may have a business income limitation if you take Section 179.
You could also take bonus depreciation
Best to think longer term when making the decision for bonus, Section 179 or regular depreciation
I would just enter the asset placed in service date as 1/1/2022 for simplification

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.