Taxpayer(plumber) and son(farmer) purchase a tractor for use in both business-50/50. Split the purhcases cost evenly and both use their share of the tractor as 100% business use. Can each use sec 179 ?
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Imho
Can't see any reason why not.Evan Appelman, EA -
Assuming the tractor was purchased by both at the same time, from an unrelated third party, then both can take a ยง179 deduction (if he otherwise qualifies). However, if the father or the son first bought the tractor, then sold a one-half interest in it to the other, then it's non-qualified property in the hands of the second person.Roland Slugg
"I do what I can."Comment
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Section 179 is limited
Each may use s.179 (if otherwise qualified) but can use only half the amount.
If this were a partnership, the IRS has rules which disallow 50/50 splits if they believe the 50/50 split is a tool to shift income or expenses
to another family member if the purpose of the split appears to be engineered to shift income without realistic substance.
And even if it's not a partnership, I believe the IRS might apply the same sort of disallowance under the circumstances.
Examples of such a tainted purpose might be a disproportionate contribution of capital to the partnership, or a father-son joint loan with a bank where it is obvious that the bank is relying upon only the father's wealth to make the loan.Comment
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