Section 179 help for 2003 return

The Section 179 election is not valid for a late filed return.

Oh, boy. That is not the answer I wanted to hear, but thanks for your response. Not to argue with someone who is more knowledgeable, but can you tell me what pub (and the section/area of the pub) gives a statement to that effect? When I reviewed instructions today the only thing I found pertained to the Special Depreciation Allowance. It stated that the special depreciation allowance had to be taken on a timely filed return. So I bet you're going to tell me that neither can be deductions on a late return... What a large gift I've given to the IRS, 2 years running.

Ck

That used to be the case, but I think it changed somewhere along the line. or maybe IRS didn't notice when I filed a late return once for a client with section 179 property. ChEAr$$$$, Harlan Lunsford, EA n LA

The regulations make it clear that a valid section 179 election *can* be made on a late-filed return. Here's what the regs say: "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."

Actually it looks like Mike's not correct. Treasury Regulation 1.179-5 says, "The election under section 179 and 26 C.F.R. § 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." Note the operative terms: the election "shall be made on the taxpayer's first income tax return for the taxable year ... (whether or not the return is timely)...." There is no restriction in section 179 that requires the election to be taken on a return that is filed timely. Stu

You are correct. It did get changed. Thanks.

Hey Harlan, That's an interesting response. I wish Mike would respond to my reply to his msg. I asked him to point out the Pub # and tell me where the statement is that says it's disallowed on a late return. Was that fairly recently that you used a 179 deduction? And did you also take the Special Depreciation Allowance? (or was it around then) Clock's a ticking' and I'm leaning towards taking the 179 and if they refuse it, maybe they can show me where to find that rule. Thanks for your input. Please share any other related info. Cathy

Well, I was just trying to be polite in my response. But more to the point, see Stuart's reply above.

Can't remember when, but probably several years ago. And I'd do it again.

Just do it.

ChEAr$$$$, Harlan Lunsford, EA n LA

I have a client who regularly files a year or more late, usually when Franchise Tax Board threatens to garnish his wife's wages. He had taken to filing their return with mortgage interest and property tax and charitable contributions only, omitting his Sch. C . We tried to claim

Thanks so much to ALL of you for your replies - and the referenced quotes as well. I know it took some time to find that specific regulation, section and paragraph.

I had about decided to take the 179 and just hope it was allowed. It's a pretty significant deduction and I need all the help I can get this year.

I have a related question I'll throw in here, but will probably need to post a new topic to get a response.

Is timely filing required to be eligible for the Special Depreciation Allowance? I understand that it is supposed to be taken in the first year that the item is put in service. But what if your return is late?

This is similar to the 179 deduction; it's difficult to find all-inclusive concrete rules in one publication. I've read so much about both subjects that they have blended into a large gray mass.

Thanks again,

Cathy