I purchased an industrial laser printer and have an LLC, however the LLC has not generated any income so I'm thinking of dissolving it. Can I still deduct with Sec 179?

[kobiBear]

Would the Section 179 deduction be applicable to a person, not a LLC in this case?

[Opus 17]

What would you do with the printer instead?  If you sell it, and it was previously depreciated, you will have taxable income to report (depreciation recapture).

Has the business ever been engaged in ongoing business activities with a profit motive?  It is not necessary that you make a profit, but it is necessary that you do the things a business does; you advertise for clients, bid for jobs, maybe do some work on spec to advertise your self, etc.

If the business was an ongoing activity that lost money, you can file a schedule C and deduct your losses.  However, the IRS might look twice at a business that was opened for 1 year, only had losses, never had income, and was then closed.  It could look like a scheme to create a paper loss for tax avoidance.

If the business was never an ongoing trade or business with a profit motive, you don't file a schedule C and you can't deduct your startup or organizational expenses. 

[kobiBear]

Thanks for the reply.

Before I created the LLC in 2021, I had some profit from sales over the years but I have not sold anything since the time of formation (I have not been very active with it). My idea was to dissolve it due to the LLC taxes on the now dormant business and just keep the name and website as I had done before formation.

I'm planning on keeping the printer I purchased in 2023, so could it qualify for the 179 deduction though I no longer have the LLC but still have the name/website? 

[Opus 17]

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@kobiBear wrote:

Thanks for the reply.

Before I created the LLC in 2021, I had some profit from sales over the years but I have not sold anything since the time of formation (I have not been very active with it). My idea was to dissolve it due to the LLC taxes on the now dormant business and just keep the name and website as I had done before formation.

I'm planning on keeping the printer I purchased in 2023, so could it qualify for the 179 deduction though I no longer have the LLC but still have the name/website? 

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You can't take a section 179 deduction unless you file a schedule C.  Are you planning to file a schedule C with no business activities?  And then file another schedule C in 2024 to close the business?  And you're going to show a big expense and a big loss with no income in the year before you close the business?  I don't know how tightly the IRS will scrutinize any particular tax return, but it doesn't sound right to me to do that.

If the business is dead as of 12/31/23, you can file a closing schedule C on your 2023 tax return, even though you don't de-register the business with the state until 2024.  Then you don't list the equipment.

Did you file a schedule C in 2021 and 2022, with no sales and no activity?

Is this printer really an ordinary and necessary expense for your business if your business is dead, you haven't sold anything since 2021?  And remember, even if you take section 179 on your 2023 tax return, and then you convert the printer to personal use in 2024 when you close the business, you will owe recapture tax when and if you sell it.

[Anonymous_]

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@kobiBear wrote:
Would the Section 179 deduction be applicable to a person, not a LLC in this case?

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No.

See https://www.irs.gov/publications/p946#en_US_2022_publink1000299339

The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year.