Section 179

[smbenson123]

Does the Section 179 special allowance apply to leased vehicles, or only purchased vehicles?

[MinhT1]

Section 179 only applies to equipment for which you retain the incidents of ownership.

Page 4 of IRS Pub 946 defines the incidents of ownership as:

Incidents of ownership in property include the following:

• The legal title to the property.

• The legal obligation to pay for the property.

• The responsibility to pay maintenance and operating expenses.

• The duty to pay any taxes on the property.

• The risk of loss if the property is destroyed, condemned, or diminished in value through obsolescence or exhaustion.

@smbenson123

[Edited 03/15/2021 |  07:40 AM PST]

[smbenson123]

Why isn't it coming up when I enter the vehicle information?  Also, is the fair market value the amount in the capitalized amount of the lease?

[ColeenD3]

A lease only qualifies as below.

Leased property. IRS Publication 946.

You can depreciate leased property only if you retain the incidents of ownership in the property (explained below). This means you bear the burden of exhaustion of the capital investment in the property. Therefore, if you lease property from someone to use in your trade or business or for the production of income, generally you cannot depreciate its cost because you do not retain the incidents of ownership. You can, however, depreciate any capital improvements you make to the property. See How Do You Treat Repairs and Improvements later in this chapter, and Additions and Improvements under Which Recovery Period Applies in chapter 4. 

If you lease property to someone, you can generally depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. However, if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased, you cannot depreciate the cost of the property.

Incidents of ownership.

Incidents of ownership in property include the following.

• The legal title to the property.

• The legal obligation to pay for the property.

• The responsibility to pay maintenance and operating expenses.

• The duty to pay any taxes on the property.

• The risk of loss if the property is destroyed, condemned, or diminished in value through obsolescence or exhaustion.