Can the section 179 expense be used 100% by stockholders of record at time of purchase when making a section 1377(a)(2) election to treat the tax year as 2 taxable years?

[debbie]

For 9 months of fiscal tax year, there were 3 stockholders.  Their stock was redeemed and issued to 25 stockholders for the remaining 3 months of the fiscal year.  Significant Section 179 purchases were made in the last three months.  Can the allocation of the section 179 be 100% given to the 25 shareholders and 0% to the 3 shareholders  if a Section 1377(a)(2) election is made?

[TaxMonkey · Accepted solution]

Wouldn't it have to be?  What other meaning would divide the year into two taxable years mean, if it doesn't mean to split the income and expenses into two different periods.

[debbie]

Thank you.