Section 179 depreciation - winding down business

[dcdeff]

I took a Section 179 depreciation on the 2021 taxes for a couple of computers for an LLC (Partnership). By the end of 2022 the company is winding down, not closed.  So I believe the value of the asset for 2022 is zero?  Do I have to do anything once the company actually closes in a few months?

[DianeW777]

Perhaps. You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less.  Also, if you sell the computers, the full amount of the sales price will be a taxable gain on your tax return as ordinary income.

You can review more details at the following link: What is Section 179 recapture?

[Mike9241]

it may even be a little more complex.

if 179 assets fall below 50% usage before the year they would be fully depreciated the 179 is completely recaptured then you get the depreciation that would normally have been allowed.  now your tax basis is the cost less the revised depreciation. if you scrapped the items then you get a deduction for the undepreciated cost. 

if you took them personally then they're regarded as being sold to you for Fair market value.

so

[dcdeff]

Thanks for your help.

[dcdeff]

Thank you, this is helpful.