Tenant spent $50000 in leasehold improvements for his nail salon in 2012. Should he take 179 deduction or Bonus depreciation?

Forum|Forum|6 years ago
December 7, 2019
6 replies
28 views

He sold business in 2013 and received no compensation for improvements. Can he take a loss on the undepreciated amounts?

ProSeries Professional

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Best answer by abctax55

Are we in the twilight zone?

Why ask about 2012 NOW ??

abctax55Answer

Level 15

Are we in the twilight zone?

Why ask about 2012 NOW ??

HumanKind... Be Both

IRonMaN

Level 15

If he sold the business in 2013 he would have a loss in that year equal to the remaining basis. I assume you are now working on his 2013 return rather than a 2017 or 18 return?

Slava Ukraini!

abctax55

Level 15

LHI's are generally MACRS 39 year property. My memory about 2012 is hazy, but I don't *think* § 179 or bonus was available.

HumanKind... Be Both

T

TaxGuyBill

I looked it up, and both were valid options for Leasehold Improvement Property. I think they are usually 15 year property, but the TCJA sort of messed that up (until a correction is made).

With that being said, if this is a Schedule C (or F), I would think Bonus would be best because it will save SE tax in 2012, and the depreciation recaptured would not be subject to SE tax in 2013 (unlike Section 179 recapture).

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