Depreciation
limits on business cars. The total section 179 deduction (Be
Certain to understand which property qualifies for the 179
treatment - see below) and depreciation you can take on a car
(that is not a clean-fuel car) you use in your business and first
place in service in 2000 cannot exceed $3,060. Your depreciation
cannot exceed $4,900 for the second year, $2,950 for the third
year, and $1,775 for each later year.
For
information on the increased limits for clean-fuel cars, see
chapter 4 in Publication
946, How To Depreciate Property.
Increased
section 179 deduction. The total cost of section 179 property
that you can elect to deduct is increased from $19,000 to $20,000
for 2000. For tax years after 2000, this amount will increase as
shown below.
Maximum
Tax Year
Deduction
2001 and 2002
$24,000
After 2002
25,000
Apportionment
is required if Code 179 property is used for both business and
non-business purposes. Reg.Section 1.179-1(d).
(b)
CODE SECTION 179 PROPERTY
Code
179 property is any tangible
property that is Code Section1245 property and that
is acquired by purchase for use in the active conduct of a trade
or business. This definition must be met during the year in
which the property is first placed in service. Property is
"placed in service" when it is placed in a condition or
state of readiness and available for a specifically assigned
function, in a trade or business, for the production of income, in
a tax-exempt activity, or in a personal activity. Reg. Section
1.179-4(e).
In
general, Code Section 1245 property is depreciable personal
property, such as machinery, equipment, and furniture. Code
Section 1245(a)(3)(A).
Code
Section 1245 property also includes:
(1)
depreciable tangible property (other than a building or its
structural components) but only if such property (i) was used as
an integral part of manufacturing, production, or extraction or of
furnishing transportation, communications, electrical energy, gas,
water, or sewage disposal services, or (ii) constituted a research
or storage facility used in connection with the above activities,
or (iii) constituted a facility used in connection with the above
activities for the bulk storage of fungible commodities (including
commodities in a liquid or gaseous state);
(2)
so much of any real property (other than property described in Code
Section 1245(a)(3)) that has an adjusted basis in which there
are reflected adjustments for amortization under Code Sections
169, 179, 179A, 185, 188 (as in effect
before its repeal by the Revenue Reconciliation Act of 1990), 190,
193, or 194 ;
(3)
depreciable single purpose agricultural or horticultural
structures;
(4)
storage facilities (not including a building or its structural
components) used in connection with the distribution of petroleum
or any primary product of petroleum; or
(5)
any railroad grading or tunnel bore (as defined in Code
Section168(e)(4)).
A
purchase is any acquisition other than from a related
person, from a decedent, or in any transaction in which the
taxpayer's basis is determined by reference to the transferor's
basis. The term "trade or business" has the same
meaning as in Code Section 162. Property held for the
production of income or other activity described in Code Section
212 is not eligible for the Code Section 179 election.
For more information on the section 179 deduction, see chapter
2 in Publication
946, How To Depreciate Property.
Solutions
are dependent upon facts & circumstances, law and the
objectives. These elements vary from one time to another, from one
circumstance to another and from person or entity to another
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