@TaxyTax , if I understand you correctly , the situation you are contemplating is as follows :
(a) at the start of year 1 the business acquires an asset for $40K to be used in production of income. The business on its tax return for the year 1 chooses to take accelerated depreciation under section 179, for the whole cost of 40K ( and let us assume that this allowed ). Also assume that the business income is sufficient to take this depreciation and still show a profit.
(b) year 2 the business buys another asset for 40K and again exercises section 179 for the new/ replacement asset. all good. so far. It now sell the earlier asset for 30K ( FMV) Since the book value of the first asset is ZERO, the disposal creates a capital gain of 30K and taxed as such.
(c) Is this going to create a sustainable / profitable situation ? I don't know without running a spread sheet with reliable/reasonable figures including data about income stream created by the asset . Can you do it -- probably. Is it going to be worth it -- I doubt it.
What you really trying to do is to find out whether this yearly accelerated ( section 179) gives you a better tax outcome than taking the regular depreciation under the same scenario.
That is my take on this. May be another poster would have a different opinion.
pk
