- 12 -
certain records regarding each piece of section 179 property.
The Commissioner has published Form 4562, Part I of which is
entitled “Election To Expense Certain Tangible Property (Section
179)”, and, as its title suggests, is intended for a taxpayer’s
use in making the election to expense section 179 property.
Petitioners did not attach to their 1998 income tax return a
Form 4562, nor did they unequivocally elect on their return to
expense the cost of the computer equipment and software under
section 179. On the other hand, petitioners did include the cost
of that property as a component of cost of goods sold. However,
we are not inclined to regard the inclusion of property in cost
of goods sold as the equivalent of an election under section 179.
See Patton v. Commissioner, 116 T.C. 206 (2001); McGrath v.
Commissioner, T.C. Memo. 2002-231; Starr v. Commissioner, T.C.
Memo. 1995-190 (“Entitlement to the benefits of section 179 is
not automatic. It requires an affirmative election be attached
to the original return or to a timely filed amended return.”),
affd. without published opinion 99 F.3d 1146 (9th Cir. 1996). In
any event, we observe that the matter is without any tax effect
in 1998 under the facts of the present case. In other words, to
the extent that petitioners are denied an expensing deduction
under section 179, they will be entitled to an increase, on a pro
tanto basis, in the amount of their home office deduction under
section 280A because the limitation imposed by section 280A(c)(5)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011