Section 179 - Schedule C Business

[Yardley CPA]

Client brought in paper work for a small Schedule C investment business that he runs. Total gross receipts amounted to just over $5,000. After taking expenses, the net income amounted to $735.

Client purchased a new Dell computer in November which cost $3,100. I just need to clarify something...can the entire purchase price of the computer be Section 179? That would obviously result in a net loss for the business.

My brain is fried...it's too late in the season and I seem to be forgetting basic stuff!

[Jerry W]

I believe may take the $735.00 to offset the income, then depreciate the remaining $2365.00.

Jerry W

[MJG CPA]

I believe may take the $735.00 to offset the income, then depreciate the remaining $2365.00.

Jerry W

You can elect to use the whole amount for sec 179, but the amount that is greater than net income (before sec 179), would be suspended and could be deducted the following year, assuming there will be a profit in 2008.

[txyank]

Client brought in paper work for a small Schedule C investment business that he runs. Total gross receipts amounted to just over $5,000. After taking expenses, the net income amounted to $735.

Client purchased a new Dell computer in November which cost $3,100. I just need to clarify something...can the entire purchase price of the computer be Section 179? That would obviously result in a net loss for the business.

My brain is fried...it's too late in the season and I seem to be forgetting basic stuff!

Yes,that's correct,if that's the only earned income he has.

[GERALD]

You can take the full 179 deduction if he has other earned income, ie w-2 income, in excess 0f that amount.

[Yardley CPA]

Yes...in addition to the Schedule C, client/wife have W2 earnings in excess of $140,000. Sorry forgot to include that.

Thanks for all the responses.

[mcb39]

Yes...in addition to the Schedule C, client/wife have W2 earnings in excess of $140,000. Sorry forgot to include that.

Thanks for all the responses.

In that case, he can take the entire deduction and probably needs it.

[jainen]

>>he can take the entire deduction and probably needs it.<<

Although he could offset W-2 income this year, by saving depreciation for the future it might reduce income that is also subject to SE tax. You'll need to consider whether he is likely to max out FICA wages, whether his income is subject to AMT or phaseouts, and anything with a similar effect on overall total tax.