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4. Election To Expense Certain Depreciable Business Assets
Pursuant to Section 179
On its 1993 Form 1120S, U.S. Income Tax Return for an S
Corporation, Special O elected to expense $10,570 pursuant to
section 179. The business assets in question consisted of
computer equipment. During the 1993 tax year, Special O reported
an ordinary loss from trade or business activities in the amount
of $40,791. Special O did not claim depreciation for any assets
placed in service during the 1993 tax year.
Section 179 allows a taxpayer to make an election to expense
up to $17,500 of the cost, or portion thereof, of section 179
property for the taxable year in which the property is placed in
service. The election, once made, is irrevocable unless the
revocation is consented to by the Commissioner. See sec. 1.179-
5, Income Tax Regs. Additionally, the amount allowed a taxpayer
as a deduction under section 179 cannot exceed the aggregate
amount of taxable income of the taxpayer for such taxable year
which is derived from the active conduct of any trade or business
during such taxable year. See sec. 179(b)(3)(A). A taxpayer may
carry over a deduction disallowed under section 179(b)(3)(A) to
another taxable year. See sec. 179(b)(3)(B).
We find that Special O is not entitled to a section 179
deduction for the 1993 tax year. Special O had no taxable income
for the tax year in issue and so would not be able to avail
itself of the benefit of a section 179 expense deduction. Since
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