Section 179 recapture

A taxpayer has a (very) small consulting software programming business. She uses a laptop with a purchase price of $1,500 and uses it solely for the business.

If she does section 179 first year expensing for the computer, what happens if in subsequent years there is no business activity?

Must there be a recapture of the Section 179 expense, or can she keep the business open and file a Schedule C reporting no income and no expenses (at least until the 5 year depreciation period for computers elapses)?

Are there other legitimate ways of avoiding the 179 recapture?

For example, what would happen if the taxpayer sells the computer at the straight-line depreciation value, and how is that reported?

Reply to
ybotka
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If she does section 179 first year expensing for the computer, what happens if in subsequent years there is no business activity?

Must there be a recapture of the Section 179 expense, or can she keep the business open and file a Schedule C reporting no income and no expenses (at least until the 5 year depreciation period for computers elapses)?

Are there other legitimate ways of avoiding the 179 recapture?

For example, what would happen if the taxpayer sells the computer at the straight-line depreciation value, and how is that reported? =========== For the sale, as the amount to be recaptured is the amount of depreciation that exceeded straight-line, the entire sale would be ordinary income (recaptured).

As for "no business activity," if the asset is IDLE (i.e. NOT used for any other purpose), I don't see anything to recapture. It may not make much business sense to idle an asset, but since is not placed into a non-business use, I see no trigger for recapture. Personal use is a trigger.

Reply to
D. Stussy

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