Taxpayer was self-employed in construction in 2016 and bought a $8500 truck (over 6000 lb. so no 280F limitations) which (according to him!) was used 100% in business all year. He elected to use Section 179 for entire $8500 cost in spite of tax preparer warnings! Now for 2017 return, he is out of the business and works as an employee. I am waiting to hear from him as to disposal of truck but I'm assuming it was converted to personal use.
My thoughts are that he has to recapture all except the allowable straight line depreciation (10% or $850) on a 4797 and carry to a Schedule C and also pay SE tax. Not a good situation! Any thoughts to make things a bit better?
If he did sell it in 2017, let's say for $4000, do we not do recapture and instead figure capital gain with a basis of $0 and l/t gain of $4000?
My thoughts are that he has to recapture all except the allowable straight line depreciation (10% or $850) on a 4797 and carry to a Schedule C and also pay SE tax. Not a good situation! Any thoughts to make things a bit better?
If he did sell it in 2017, let's say for $4000, do we not do recapture and instead figure capital gain with a basis of $0 and l/t gain of $4000?
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