Sec 179 Expense

[Unregistered]

In 2004, I took $100K Depreciation Expense on Schedule C of the 1040 return for a machine that costs $100K. I bought the machine on a contract lease, and I will own the machine at the end of the lease payments. Can I deduct the $43K in lease paymnets on line 20 of Part ll of Schedule for 2005. Thanks. Dave.

[Jiggers]

Sec 179 & lease payments

Sounds like you are double dipping. You can Section 179 the machine and then write off the lease payments. The lease payments should probably be considered note payments.

[LCP]

And related to that ........ I've wondered in the past what the criteria was that would allow me to capitalize a lease for the specific purpose of taking the Sec. 179 deduction in the first year.

I think I came to the conclusion that it came down to GAAP. Agreed?

[OldJack]

No you wrote off the cost of the machine in 2004 so the lease payments are not deductible as they are considered payments on a debt.

[Matt Sova]

Interest

You have to figure out what the interest portion of those debt payments are. That portion is deductible as interest expense. The principal portion is not deductible.