Taxpayer (sole proprietor) was considering buying a new computer for a while. Upon seeing some attractive post-holiday sales, taxpayer pulls the trigger and buys it on 12/30. Taxpayer used the computer for 100% business use on 12/30 and 12/31 (setting it up, transferring over business records, installing software used by the business, etc.)
The business is one eligible to election Sec 179 treatment of assets eligible for Sec 179 expensing.
Pub 946 says that when electing Sec 179 you use the the business use percentage for the year the asset was placed in service (which here is
100%).
It alo says that you only recapture depreciation in future years when the business use percentage falls below 50% (this is listed property, remember).
The thing is that for this taxpayer the over-the-life-of-the-asset business use percentage will likely be around 75%. While the computer was legitimately and actually used 100% for business in 2009 that was unrepresentative of the "true" use due to the fact it was only in service in 2009 for two days.
Now, the letter of Pub 946 seems to indicate that the Sec 179 expense should be taken as 100% of the cost of the asset in this case. But to naive me that doesn't seem to pass the smell test given that the representative use will likely be around 75%.
So, which is it? Take the Sec 179 at 100% of the cost or at 75% of the cost?
-- Rich Carreiro snipped-for-privacy@rlcarr.com