179, Sch. C loss

[Gretel]

Prior tax preparer didn't think.

Client started biz in 2005, ended up with small loss. Preparer took 179 which carries over to 2006. Biz sold in 2006. Again small loss on Sch. C.

For purposes of recognizing gain on sale of assets: Is 179 allowed or allowable depreciation and client is stuck with full gain? Os is this similar to OIH depreciation if you have loss on biz and depreciation not allowed because of losses doesn't count as allowed or allowable?

[OldJack]

If the client had W2 or other business income on his 1040, the sec. 179 deduction and Sch-C loss should have been deductible. You may need an amended return? If the 179 depreciation was claimed but never deducted it would not be treated as prior depreciation on sale of the asset.

[Gretel]

Thank you, Old Jack. No other business income.

[Chief]

Gaabriele

Isn't tax preparation an interesting business to be engaged in? I love every minute of it.

[Gretel]

Isn't tax preparation an interesting business to be engaged in? I love every minute of it.

Yep, my love growes and my judgements diminish. One important thing I learned is to never take the client's word for real when they talk about other professionals.

[cpadan]

If the client had W2 or other business income on his 1040, the sec. 179 deduction and Sch-C loss should have been deductible. You may need an amended return? If the 179 depreciation was claimed but never deducted it would not be treated as prior depreciation on sale of the asset.

Also, per Reg § 1.179-2(c)(6)(iii) , section 179 can be used against 1231 gains from the sale of business property
Dan