Claiming Section 179 on an amended form 1120S filed after the original extended due date

[Hank]

I have a client that needs to have an amended 1120s prepared due to claiming the ERC for the 2021 tax year.  The original return was filed prior to the original due date of March 15, 2022.  It would be beneficial to claim Section 179 on some assets to help offset the increase in income created the ERC.  I am finding various conflicting resources that support both sides of the issue.  The instructions for form 4562 indicate that the section 179 election can be claimed on "an amended return filed within the time prescribed by law for the applicable tax year".  Does this mean by the original due date plus extensions (9/15/22) or does this mean by the three-year time limit to file an amended corporate return.  Any assistance would be appreciated.  Thanks.

[Terry53029]

this is from 26 CRF 1.179-5. Here is the link: https://www.law.cornell.edu/cfr/text/26/1.179-5

§ 1.179-5 Time and manner of making election.

(a) Election. A separate election must be made for each taxable year in which a section 179 expense deduction is claimed with respect to section 179 property. The election under section 179 and § 1.179-1 to claim a section 179 expense deduction for section 179 property shall be made on the taxpayer's first income tax return for the taxable year to which the election applies (whether or not the return is timely) or on an amended return filed within the time prescribed by law (including extensions) for filing the return for such taxable year. The election shall be made by showing as a separate item on the taxpayer's income tax return the following items:

[Hank]

So it appears that the amended return needed to be filed by the September 15, 2022 due date in order to claim the Section 179.  Thank you for your assistance.

[dkh]

I have amended individual returns within the 3 year time frame and changed Sec179 depreciation. 

A taxpayer may make, revoke, or change an election without IRS consent on an amended return  per code sec 179(c)(2);  Reg 1.179-5(c); Rev Proc 2017-33 

Does this apply to S Corporations - I don't know      Just giving you information that may help lead you to the answer you need. 

[Hank]

Thank you.

[TaxGuyBill]

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@dkh wrote:

I have amended individual returns within the 3 year time frame and changed Sec179 depreciation. 

A taxpayer may make, revoke, or change an election without IRS consent on an amended return  per code sec 179(c)(2);  Reg 1.179-5(c); Rev Proc 2017-33 

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All of those say you can revoke or change it, but that is only if you had originally made a 179 election on the timely return.

[dkh]

This info is out of the Master Tax Guide ¶1208.  It states you can make, revoke, or change     I have amended individual returns to elect Sec179 that was not on the original return - cited the Reg in the explanation on 1040X - did not have any issues with it being allowed.

[TaxGuyBill]

The cited Reg says "within the time prescribed by law (including extensions) for filing the return for such taxable year".   To me, that means by April 15th/October 15th.

Just because you didn't have any issues doesn't mean it is correct.

Unfortunately, I've seen a number of questionable items in the Master Tax Guide.  Does it say that for an AMENDED return?  It is allowed for a late original return.

I would be happy to be wrong, but to me everything says that if it is on an amended return it needs to be done by April 15th/October 15th.

[Terry53029]

@TaxGuyBill From 2021 pub 946 An election (or any specification made in the election) to take a section 179 deduction for 2021 can be revoked without IRS approval by filing an amended return. The amended return must be filed within the time prescribed by law.  Pub 946 says the same thing the regs said. I read that as meaning you must file Form 1040-X within 3 years after the date you timely filed your original return or within 2 years after the date you paid the tax, whichever is later.

[BobKamman]

Quoting a Treasury Regulation issued in 2005 is something like quoting a Supreme Court decision issued in 1973. You should check on whether subsequent events have made it obsolete. In this case, the history is in Rev Proc 2017-33:

Section 1.179-5(c) was promulgated in 2005 and has not been amended to reflect the extensions of § 179(c)(2) to taxable years beginning before 2015. However, in 2008, the Treasury Department and the IRS issued Rev. Proc. 2008-54, 2008-2 C.B. 722. Section 7 of Rev. Proc. 2008-54 provides that for a taxable year beginning after 2007 and before the last year provided in § 179(c)(2) for revoking a § 179 election by a taxpayer for any § 179 property, the taxpayer will be permitted to make a § 179 election on an amended return for that taxable year without the Commissioner’s consent. Section 7 of Rev. Proc. 2008-54 further provides that until § 1.179-5(c) is amended to incorporate this guidance, taxpayers may rely on such guidance. Section 124(d) of the PATH Act amends § 179(c)(2) to make permanent the permission granted to a taxpayer to revoke a § 179 election for any § 179 property without the Commissioner’s consent. This amendment applies to taxable years beginning after 2014. As a result, some taxpayers are uncertain about whether a § 179 election for taxable years beginning after 2014 may be made on an amended Federal tax return without the Commissioner’s consent. Section 3.02 of this revenue procedure provides the rules for making such a § 179 election.

[TaxGuyBill]

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@Terry53029 wrote:

 The amended return must be filed within the time prescribed by law.

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First, you are not revoking it.  You are making it.

The time prescribed by law for filing the return is April 15th/October 15th (3.5 months and 9.5 months after the end of the tax year).  That has nothing to do with the 3 year limit for refunds.  To me, the Publication and Regulation is clear that it is not allowed after that.

However, at first glance it seems that Bob's cited 2008-54 may to allow it.  But I've also had a couple of glasses of wine, so I would need to look closer at that later.  😂🍷🍷