George H. Richards - Page 19

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          office for which the requirements of section 280A(c)(1) are met.            
               Section 179 has its own substantiation and election                    
          requirements.  The taxpayer must maintain records reflecting how            
          and from whom the section 179 property was acquired, and when it            
          was placed in service.  Sec. 1.179-5(a), Income Tax Regs.  The              
          taxpayer is also required to elect on his first return for the              
          taxable year or on a timely filed amended return as a separate              
          item the total section 179 expense deduction claimed with respect           
          to all section 179 property selected and the portion of that                
          deduction allocable to each specific item.  Id.                             
               Petitioner indicated on Form 4562 attached to his Schedule C           
          that he elected to deduct computer equipment as a current expense           
          under section 179.  Petitioner’s computer equipment qualifies as            
          section 179 property because it is tangible property to which               
          section 168 applies.  Secs. 167(a)(1) and 168(f).  The computer             
          equipment also qualifies as section 1245 property.  Sec.                    
               Petitioner’s computer equipment is not listed property under           
          section 274(d)(4) because it falls under the home office                    
          exception to section 274 under section 280F(d)(4)(B) and section            
          280A(c)(1), as discussed below.  Therefore, the computer                    
          equipment is not subject to the substantiation requirements of              
          section 274.  Nevertheless, the computer equipment is subject to            

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Last modified: May 25, 2011