I got a call from a prospect. Prospect says he is self employed files Sch C and wants to know if he purchased a qualifying Section 179 asset for his business on Dec 30th, 2014 and returned it to the seller for a full refund in Jan 2015, would that generate a red flag for the IRS on his 2015 tax return? When I try to get him to elaborate, he was mum but I got the impression he has some onetime windfall income that came to him or will come to him in 2014. Would you call this guy back? Anyone ever prepare a Sch C tax return like this?
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Last edited by AZ-Tax; 11-22-2014, 07:27 AM. -
He can't deduct it until he puts it into use. Does the recapture show a date it ceased being treated as qualified property? If it's legal...... After all, one can sell stock at a gain to take advantage of recognizing income in one year, or using a reduced cap gains rate, and buy it back the same day or the next in that same year.Last edited by Burke; 11-22-2014, 05:02 PM. -
If it is "placed in service" in 2014, would it be "ordinary" or "necessary" to put something in service in one month with the intent to return it the next month?
Also, if was "placed in service", the item is now 'used'. Would the item be ABLE to be returned in a 'used' condition?Comment
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I think maybe substance over form might come in to play here especially since the strategy was discussed in advance with the preparer.
Also, if eligible for return, was the property ever placed in service?
This seems like a client that will be a problem in the future.Comment
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