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Sebastian44
Level 2

Sec. 179 vs Bonus

Hello, I was wondering if I can choose to use bonus depreciation on an asset rather than using Sec. 179? Or do I have to use Sec.179 before using bonus depreciation? The Partnership will be showing a loss for 2019 prior to deprecation expense and I was looking to use bonus instead being that it can increase a loss unlike Sec. 179. Also, in using bonus depreciation do I have to depreciate the 100% of the asset or can I depreciate a partial amount?

Any help will be appreciated, thank you!

1 Comment 1
Rustler
Level 15

Sec. 179 vs Bonus

Section 179 is limited to taxpayer’s business income. Passive income, such as assets used in rental property, is not eligible for the deduction. Also, bonus depreciation can push the taxpayer into a net operating loss, but Section 179 cannot. Unlike bonus depreciation, any Section 179 deduction elected that is not allowed due to income limitation is carried forward to future years. So in short, A business can’t claim Section 179 unless it has a taxable profit.

 

Bonus Depreciation is all or nothing. If you elect bonus depreciation then the entire class of fixed assets are used.

 

Yes you can use both, but section 179 must be used first if you do that.

 

This is really a more complicated subject than it appears. From what you say about the partnership I would suggest using section 179 for 2019. That will probably not be used and will be carried forward to future years intact thus lowering future year income tax payable. Bonus depreciation will put you in the negative side for this year, but really is there a point to that?

 

BUT, but you really need to talk to a tax professional.

 

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