James M. and Ruth J. Riley - Page 21

                                       - 20 -                                         
               Section 179(a) generally allows a taxpayer to elect to treat           
          the cost of section 179 property as a current expense in the year           
          the property is placed in service, within certain dollar                    
          limitations.  Sec. 179(b).  The election must be made on the                
          taxpayer’s first income tax return (whether or not the return is            
          timely) or on an amended return filed within the time prescribed            
          by law (including extensions) for filing the original return for            
          such year.  Sec. 179(c)(1)(B); Genck v. Commissioner, T.C. Memo.            
          1998-105; sec 1.179-5(a), Income Tax Regs.  A taxpayer may not              
          elect to expense the cost of section 179 property in a year other           
          than the year in which the property is placed in service.  Kay v.           
          Commissioner, T.C. Memo. 2002-197, affd. 85 Fed. Appx. 362 (5th             
          Cir. 2003).                                                                 
               Petitioners’ truck was placed in service in 2001, and                  
          petitioners were required to make the election under section 179            
          on their 2001 return.  Petitioners did not elect to expense the             
          cost of the truck on their 2001 return.  Instead, they claimed a            
          $7,000 depreciation deduction for the truck, depreciating the               
          $35,000 cost of the truck over 5 years using the straight-line              
          method.  Their attempt to make the section 179 election on their            
          2002 return was ineffective.  See Kay v. Commissioner, supra.               
               We hold that petitioners are entitled to deduct $7,000 for             
          depreciation of the truck for each year in issue.                           

Page:  Previous  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next

Last modified: May 25, 2011