topic Can 179 losses offset my capital gains on non related stock gains in Investors & landlords

Can 179 losses offset my capital gains on non related stock gains

g12196 — Fri, 01 Nov 2019 15:27:04 GMT

I am a new business owner as of 2019, and have invested $150,000 in equipment, vans, machines etc. and will show a sizable loss this year.
Unrelated to this business I would like to sell some of my stock holdings but will have $200,000 in capital gains, can I use my business losses by utilizing the accelerated 179 deductions for that equipment?

Essentially reducing my stock capital gain income to $50,000 as I carry over the $150,000 loss to my 1040?

Also does it matter what month in 2019 the equipment was purchased.

Thank you

Re: Can 179 losses offset my capital gains on non related stock gains

Anonymous_ — Fri, 01 Nov 2019 16:32:52 GMT

@g12196 wrote:
Essentially reducing my stock capital gain income to $50,000 as I carry over the $150,000 loss to my 1040?

Section 179(b)(3)(A) provides that a taxpayer’s Section 179 deduction for any taxable year, after application of the Section 179(b)(1) and (2) limitations, is limited to the taxpayer’s taxable income for that taxable year that is derived from the taxpayer’s active conduct of any trade or business during that taxable year.

See https://www.irs.gov/pub/irs-drop/rp-19-08.pdf

Re: Can 179 losses offset my capital gains on non related stock gains

g12196 — Fri, 01 Nov 2019 18:20:59 GMT

So I read your Answer as a “no” I cannot offset capital gains on stock as it’s not an active conduct of trade or business.

However since I retired at 55 (3 years ago) my sole income is buying and selling stock, the business I bought for for my wife in August. Could it then be interpreted to mean my active trade or business has been profiting off of stock sales?

I suppose the rub is in that IRS statement you provided on the comments, is it implied that the loss or 179 wrote off is solely related to the active trade or business or could it be any active trade or business? For example if I had business entity A with a loss and business entity B with a gain, can A’s loss offset B’s gain?
Thanks for your help

Re: Can 179 losses offset my capital gains on non related stock gains

g12196 — Fri, 01 Nov 2019 18:28:22 GMT

So I read your Answer as a “no” I cannot offset capital gains on stock as it’s not an active conduct of trade or business.

Re: Can 179 losses offset my capital gains on non related stock gains

Anonymous_ — Fri, 01 Nov 2019 18:40:27 GMT

@g12196 With respect to buying and selling securities, there are investors, dealers, and traders as far as the IRS is concerned. Unless you qualify as a dealer or trader, you do not have a trade or business.

See https://www.irs.gov/taxtopics/tc429

Re: Can 179 losses offset my capital gains on non related stock gains

g12196 — Fri, 01 Nov 2019 20:35:54 GMT

Thanks for the help as you have convinced me that what I was hoping to do will not work.

Thanks again

Re: Can 179 losses offset my capital gains on non related stock gains

SOtwell — Fri, 19 Feb 2021 00:37:16 GMT

On a ranch, sales of your livestock that is over 2 years old is considered capital gains, however, all the ranch expenses, including 179 expenses are reported on a schedule F. I can't seem to take my 179 deductions, because the schedule F for the business shows a loss, but my overall income when you add my capital gains (from livestock) is a taxable income. How can I apply the equipment I buy to the capital gains from my livestock?

Re: Can 179 losses offset my capital gains on non related stock gains

MarilynG1 — Tue, 23 Feb 2021 00:49:52 GMT

@SOtwell You will have a 179 Carryover Loss if you're not able to use the 179 Deductions this year on your Schedule F.

Here are the rules and limitations for 2020:

The asset must be tangible personal property, including software (not real estate).
It must be used in a trade or business (property used in a rental activity is generally not eligible).
You must take the deduction in the year you start using the asset.
The decision to use Section 179 must be made in the year the asset is put to use for business.
The deduction cannot be more than your earned income (net business income and wages) for the year.

Click this link for more info on Depreciation of Business Assets