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  • 1.  Section 179 deduction for truck

    Posted 10-15-2021 11:26 AM
    Client formed new salvage business in September 2020 and purchased a dump truck. However, after purchasing it he discovered that he could not operate his business before being approved for that service by New Jersey. He is still waiting for the authorization to come through. One of the qualifications is "placed in service" in 2020.

    So is he NOT able to take the Section 179 since he could not yet operate the business?

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    Yves Richards
    Yves Richards, CPA
    Baldwin NY
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  • 2.  RE: Section 179 deduction for truck

    Silver Most Valuable Member
    Posted 10-16-2021 09:04 AM
    There have been many cases of disagreement between taxpayers and the IRS on this.  And courts rulings have been all over the place.  

    In one case concerning a building that required a special CO, the IRS disallowed the depreciation based on the argument that until the CO was in place, the building was not in a "condition of readiness and availability for a specifically assigned function".  The IRS argued that a business is not "open for business" until the condition of readiness is satisfied.  Is the requirement of a permit to begin operations the same thing?

    On the other hand, in another case, a court concluded that "depreciation may be taken when depreciable property is available for use 'should the occasion arise,' even if the property is not in fact in use",  Results often differ based on what type of property is involved and what is the specific use of such property.  

    The bottom line is there is no simple answer.  You need to look at some examples and determine which fits your situation the closest, discuss this with your client, and use your own judgement.


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    Larry Prosky CPA
    Prosky & Rosenfeld LLP CPAs

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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.