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Section 179 Property - Form 4562

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Question
Section 179 Property - Form 4562

Answer

Section 179 property is property that you acquired by purchase for use in the active conduct of your trade or business, and is one of the following:

  • Tangible personal property or
  • Other tangible property (except buildings and their structural components) used as:
  1. An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services;
  2. A research facility used in connection with any of the activities in (1) above; or
  3. A Facility used in connection with any of the activities in (1) above for the bulk storage of fungible commodities
  • Single purpose agricultural (livestock) or horticultural structures
  • Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum
  • Off-the-shelf computer software.
  • Qualified real property

Section 179 property does NOT include the following:

  • Property held for investment (section 212 property).
  • Property used mainly outside the United States (except for property described in section 168(g)(4)).
  • Property used mainly to furnish lodging or in connection with the furnishing of lodging (except as provided in section 50(b)(2)).
  • Property used by a tax-exempt organization (other than a section 521 farmer's cooperative) unless the property is used mainly in a taxable unrelated trade or business.
  • Property used by a governmental unit or foreign person or entity (except for property used under a lease with a term of less than 6 months).
  • Air conditioning or heating units.

Election to Expense Certain Property Under Section 179

You can elect to expense part or all of the cost of section 179 property that you placed in service during the tax year and used predominantly (more than 50%) in your trade or business.  However, for taxpayers other than a corporation, this election does not apply to any section 179 property you purchased and leased to others unless:

  • You manufactured or produced the property or
  • The term of the lease is less than 50% of the property's class life and, for the first 12 months after the property is transferred to the lessee, the deductions related to the property allowed to you as trade or business expenses (except rents and reimbursed amounts) are more than 15% of the rental income from the property.

For more information see IRS Instructions for Form 4562


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Views: 432 Created on: Jun 15, 2013
Date updated: Sep 01, 2015

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