Category: Deductions & Credits Copyright 1998, The Tax Resource Group. All rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com You have directed me to spend a very limited amount of research time on the issue set forth below. There is an obvious risk that a more thorough investigation of the matter could produce other relevant information with could materially impact the conclusion stated herein. The issue is whether assets placed in service and disposed of in the same year count against the aggregate $200,000 limitation set forth in IRC Section 179(b)(2). Based on the extremely limited scope of this engagement, it seems to me that such asset acquisitions do in fact count for purposes of the $200,000 rule of Section 179(b)(2). The very simple reason for my conclusion is the plain words of the statute require that result in the absence of some express exception. I cannot locate such an exception. Accordingly, the plain and unambiguous words of the statute must control. Section 179(b)(2) says the overall $17,500 limitation under Section 179(b)(1) is reduced (but not below zero) to the extent the amount of Section 179 property placed in service during the taxable year exceeds $200,000. The phrase "Section 179 property" is defined in the statute. There is no indication that property purchased and disposed of in the same tax year is not deemed to be Section 179 property for some reason. The concept of "placed in service" is defined by the regulations at Section 1.179-4(e) to mean property which is put is a condition of readiness and availability for a specifically assigned function. Again, there is no indication that assets placed in service but disposed of in the same tax year are deemed not placed in service in the first instance. There is a reference in Regulation Section 1.179-4(e) to the regulations under Section 1.46-3(d)(2) with respect to the issue of placed in service. These regulations should be reviewed carefully for evidence of a special rule regarding assets placed in service and disposed of in the same tax year. My scope of work did not permit this to be done. I would be happy to pursue this if you so desire. Absent a specific rule or exception, the assets placed in service and disposed of in the same tax year clearly count against the $200,000 limit by virtue of the plain words of the statute. Since I have been unable to locate any explicit exception, it is my strong view, again based on the limited scope of my work, that such asset purchases do in fact count against the $200,000 limitation imposed under Section 179(b)(2). |
