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to claim a depreciation deduction for the cost of the SUV in the
maximum amount allowed under section 179. Respondent maintains
that petitioners failed to make a valid election as required
under section 179 to depreciate the SUV and that the $24,000
expense deduction claimed on the 2003 return should be disallowed
because petitioners have not substantiated that expense as an
employee business expense.
Under section 179, a taxpayer may elect to treat the cost of
certain property used in an active trade or business as a current
expense in the year such property is placed in service. Sec.
179(a). The aggregate cost that a taxpayer can deduct under
section 179 for 2003 is $25,000. Sec. 179(b). Section 179(c)(1)
provides that an election must:
(A) specify the items of section 179 property to
which the election applies and the portion of the cost
of each of such items which is to be taken into account
under subsection (a), and
(B) be made on the taxpayer’s return of the tax
imposed by this chapter for the taxable year.
The benefits of section 179 require an affirmative election to be
made on a taxpayer’s original return or a timely filed amended
return. See Starr v. Commissioner, T.C. Memo. 1995-190, affd.
without published opinion 99 F.3d 1146 (9th Cir. 1996).
Petitioners failed to elect explicitly to deduct the cost of
their SUV as a section 179 expense on their 2003 return.
Although they attached a Schedule C to their return listing their
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Last modified: November 10, 2007