Section 179 for asset in service in 2022 but half paid in2021

Forum|Forum|4 years ago
February 13, 2022
1 reply
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If $5000 was put down as a deposit on a capital asset placed in service in 2022 when the remaining $5000 was paid, should the entire cost of the asset be taken as a section 179 deduction in 2022 for a cash basis taxpayer? The section 179 deduction has to be taken in the year the asset was placed in service, however part of the asset was paid in 2021. I thought it may be easier just to expense each payment in its respective year, but the proper way to do this would be to record it as a depreciable asset and take the 179 deduction. It is a generator for a business.

Not A Product Question

ColeenD3

Since it was placed in service in 2022, you would include the asset on your 2022 tax return next year. You can take a Section 179 deduction.

At this point, this is the information available for the 2022 deduction. Things can change.

It lets you deduct all or part of the cost of equipment that is purchased or financed and put into place before December 31, 2022. The only stipulation is that the equipment needs to qualify for the deduction.

L

ldawn513Author

Employee

Thank you for your answer. I am curious though, if the asset was placed in service in 2021 but the final payment wasn't made until 2022, would half of the asset cost be a section 179 in 2021, and the remaining amount paid in 2022 be depreciated over the remaining life of the asset? The section 179 can only be used in the year the asset was placed in service but the final payoff wasn't until 2022 - cash basis taxpayer.