Section 179 deduction for a fiscal year partnership

[Naveen Mohan from New York]

I have a client who is filing his initial and final partnership on the same tax return because he started and closed his business in the same tax year. Can he claim section 179 deduction?

partnership is showing new loss but the individual partners have positive job income to absorb the section 179 deduction if it is allowed in this case. 

thanks for your help.

 

Naveen Mohan 

[kcjenkins]

No, if they sold the asset in the same year they bought it, there is no Sec 179 deduction.  While the code does not specify this, it does specify that Sec 179 deduction is recaptured in the year the usage has dropped below 50%.  Usage is below 50% if sold. So if you took it you would then have to recapture it, zeroing it out.  

[Abby Normal]

Also, it's limit at the entity level, so the partnership would need to show a profit to begin with.

On another note, what happened to the assets? Were they junked, sold or distributed to the partners?