Ok, my understanding has always been that Section 179 is limited to the Schedule C income and you can't show a loss with 179. However, I am reading in TTB 9-15 on the business income limitation chart and see it says the business income limitation is total of C income and wages of the individual?????
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I'm thinking I have some ammending to do???!!!??? (On sole proprietorships) -
Section 179 is an election, not a requirement. You don't have to amend if taxpayer is OK with claiming depreciation each year over the life of the asset. There are reasons why you might not want to elect 179.Originally posted by Super Mom View PostComment
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One reason NOT to elect Sec 179 is when the business does go into the hole by electing 179. If you use W-2 income to claim 179 so that you can run Schedule C into the whole, you are wasting depreciation deductions that could reduce SE tax in the future.
For example. 2012 W-2 is $80,000 and Schedule C profit before depreciation is $10,000. Say you have $20,000 of new purchases eligible for 179. Assume 2013 income will be the same except no new purchases for depreciation purposes.
If you take full 179 deduction in 2012, SE tax is wiped out, but SE tax for 2013 will be based on a $10,000 profit. But you can also wipe out SE tax in 2012 by only electing $10,000 of 179. In turn, that gives you some depreciation expense for 2013 that can be used to offset the $10,000 of SE income for 2013.Comment
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So, I'm looking at the ordering rules for bonus depreciation on TTB 9-17. TP can elect 0 179 expense, then go to the bonus?Comment
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Think about it ...
If you elect Section 179, what would you be left with to get bonus depreciation?Originally posted by Super Mom View PostComment
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Yes, you can do bonus depreciation without electing 179. The ordering rules apply when you do both.Originally posted by Super Mom View PostComment
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Thanks so much!!!
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