179 Election not on timely filed return

[erchess]

When I first learned about the Sec. 179 Election To Expense I learned that it could be claimed only on a timely filed (including extensions) original return. Thus it could not be claimed on a late return, on an amend filed after the deadline, or at audit when the auditor is claiming that an ordinary expense should have been depreciated. However I vaguely remember hearing that this has changed. Has it indeed changed, and if so what was the first tax year to which the change applied and what are the rules? Feel free to refer me to sources.

[Burke]

The election for Section 179 may be made or revoked on a timely-filed original, OR timely- filed amended return. Per QF page 10-8 (2005) "A taxpayer is allowed to make or revoke the expensing election on an amended return with respect to taxable years beginning after 2002 and before 2008. Once election is revoked, however, it cannot be remade. Prior to 2003, an election to expense an item under Section 179 could only be made on an original return for the year the property was first placed in service (whether or not the tax return was filed on time), or on an amended return that was filed by the due date (including extensions) of the return for the year the property was placed in service."

[New York Enrolled Agent]

Erchess

I don't disagree with Burke but QF may not cut it with an IRS auditor.

You can show the auditor Reg §1.179-5(c) which should convince them.

(c) Section 179 property placed in service by the taxpayer in a taxable year beginning after 2002 and before 2008.

(1) In general. For any taxable year beginning after 2002 and before 2008, a taxpayer is permitted to make or revoke an election under section 179 without the consent of the Commissioner on an amended Federal tax return for that taxable year. This amended return must be filed within the time prescribed by law for filing an amended return for such taxable year.

I THINK that this regulation will probably be updated to extend the ending date replacing 2008 with 2011. PL 109-222 amended §179(c) to 2010 and then PL 110-28 further extended to 2011.

[veritas]

If I was an auditor

Erchess

I don't disagree with Burke but QF may not cut it with an IRS auditor.

You can show the auditor Reg §1.179-5(c) which should convince them.

(c) Section 179 property placed in service by the taxpayer in a taxable year beginning after 2002 and before 2008.

(1) In general. For any taxable year beginning after 2002 and before 2008, a taxpayer is permitted to make or revoke an election under section 179 without the consent of the Commissioner on an amended Federal tax return for that taxable year. This amended return must be filed within the time prescribed by law for filing an amended return for such taxable year.

I THINK that this regulation will probably be updated to extend the ending date replacing 2008 with 2011. PL 109-222 amended §179(c) to 2010 and then PL 110-28 further extended to 2011.

I wouldn't accept QF for authority either. The TaxBook however should be more than sufficient.

[erchess]

Just to clarify

At the time of Audit if the auditor says "this should have been depreciated not expensed " is it too late to say "fine we'll take a 179 Election"?