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Depreciation question

Forum|Forum|6 years ago
March 5, 2020
19 replies
66 views

I am trying to write off a tractor (section 179) for $17,533. It's most beneficial to only write off $10,433 and depreciate the remaining $7,100 over 5 years. There is a net profit on the farm, even after writing off the entire $17,533. I understand that you can't section 179 anything to create a loss.

ProSeries Professional

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Best answer by taxiowa

I've actually tried 2 types...

G-General purpose and E2-Qualified Farm Mach. It really needs to be E2 (5 years)

I'm getting the same results for both

You have to have business income on return to deduct 179 expense. Form 4835 does not supply business income as it is passive rental income.

T

Terry53029

Intuit Community Champion

You should also consider bonus depreciation, but what is your question, and what software are you using

J

Jane918Author

Level 4

ProSeries is the software

I'm trying to understand why I'm unable to depreciate the entire cost of the tractor using section 179, with the farm still showing a net profit

IRonMaN

Level 15

What type of entity are you dealing with?

Slava Ukraini!

abctax55

Level 15

" I understand that you can't section 179 anything to create a loss. "

That is not correct. If there is other 'business' income on the return (including W-2 income) all of the §179 can be utilized. And if not, it can be carried forward to the next year, to offset farm (and S/E income).

You can select any amount for § 179, but for bonus you would have to use either 100%, or zero.

HumanKind... Be Both

J

Jane918Author

Level 4

There is also some W2 income

I agree with you regarding "you can select any amount for S179"...that's why I'm confused. When I try to section 179 the whole amount, it is only allowing a portion of the cost

IRonMaN

Level 15

But hold the phone, what am I missing? If there is a net profit after writing off the entire $17,533, why are you concerned about creating a loss?

Slava Ukraini!

J

Jane918Author

Level 4

I'm not worried about creating a loss. I was just stating that if I was able to write off the entire amount (S179), the farm would still be showing a profit, so that's why I'm not understanding why I cannot write off the whole amount. I'm fine with the result of writing off only a portion and depreciating the remaining over 5 years...I'm just trying to understand why this is happening

IRonMaN

Level 15

How about providing some numbers on the tax return so folks can maybe get a better idea of what is happening. It's kinda hard to see that return from here.

Slava Ukraini!

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