Perry H. Kay, Sr. - Page 8

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          587.  However, the business standard mileage rate may not be used           
          to compute deductible expenses if the taxpayer has claimed a                
          section 179 expense deduction on the same vehicle.  Rev. Proc.              
          97-58, 1997-2 C.B. 587.  Thus, petitioner may not claim                     
          deductions on the van for both the section 179 expense and the              
          standard mileage rate.  Assuming petitioner could substantiate              
          entitlement to a deduction for both expenses, petitioner would be           
          limited to either the section 179 expense deduction or the                  
          standard mileage rate deduction, but not both.                              
                    i.  Section 179 Expense                                           
               Petitioner claimed a section 179 expense deduction of $7,000           
          on Schedule C for the year at issue.  For the 1998 taxable year,            
          section 179 allows a taxpayer to elect to expense, as a deduction           
          for the year in which the property was placed in service, up to             
          $18,500 of the cost of certain property acquired for use in the             
          active conduct of a trade or business.  Sec. 179(a), (b), (d).              
          “The term ‘placed in service’ means the time that property is               
          first placed by the taxpayer in a condition or state of readiness           
          and availability for a specifically assigned function, whether              
          for use in a trade or business, for the production of income, in            
          a tax-exempt activity, or in a personal activity.”  Sec. 1.179-             
          4(e), Income Tax Regs.                                                      
               Petitioner claimed on Form 4562, Depreciation and                      
          Amortization, that the van was placed in service on January 1,              

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