Section 179 Questions

[mshine]

My client owns a retail shop that sells outerwear and equipment. He owns the building that holds the shop and leases to another tenant within the same building. In 2016, he added a bathroom to the space one of his tenants leases. He also purchased a $35,000 truck for business use and he also added a bathroom to the building. He would like to Section 179 both of these. Can he?

[Gretel]

No, he cannot. For the truck it depends on various factors, like % of business use, if this is deemed to be a heavy truck.

[TaxGuyBill]

If the bathroom is exclusively in the Leased space, it probably qualifies as Qualified Leasehold Improvement Property (see links to make that determination). In that case, yes, it does qualify for Section 179.

https://www.irs.gov/publications/p94...link1000107397
https://www.irs.gov/publications/p94...link1000299536


As Gretel said, it depends. If it is over 50% business use, yes, it qualifies, but maybe not all of it. You need to determine the specific details of the vehicle, including its "gross vehicle weight" or "unloaded gross vehicle weight".

https://www.law.cornell.edu/uscode/text/26/179#b_5

https://www.law.cornell.edu/uscode/text/26/280F#d_5

[Gretel]

If the bathroom is exclusively in the Leased space, it probably qualifies as Qualified Leasehold Improvement Property (see links to make that determination). In that case, yes, it does qualify for Section 179.

https://www.irs.gov/publications/p94...link1000107397
https://www.irs.gov/publications/p94...link1000299536

Wow, I was ignorant, thanks Bees. I actually misunderstood who qualifies for a Sec.179 leasehold improvement and now need to ask this question: Do both, lessee and lessor generally qualify if other requirements are met?

[TaxGuyBill]

Wow, I was ignorant, thanks Bees. I actually misunderstood who qualifies for a Sec.179 leasehold improvement and now need to ask this question: Do both, lessee and lessor generally qualify if other requirements are met?

Yep, they both qualify.

https://www.law.cornell.edu/uscode/text/26/168#e_6