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TBF205860
Level 1

Does higher Q4 expense disqualify 179 deduction and require MACRS

What negatives do I face by having the majority of my business expense in Q4?

  • Q1-Q3 had minimal expenses (software and office supplies)
  • Q4 expenses will be 10x that of Q1-Q3 (new video and audio equipment, and computer)
  • 2021 expenses will total close to15% of 2021's income.

Does this prevent a 179 deduction in 2021 and require a MACRS? Does having higher Q4 expenses trigger an audit?

2 Replies
Mike9241
Level 15

Does higher Q4 expense disqualify 179 deduction and require MACRS

section 179 is limited to business income before the deduction for 179 depreciation.  most items that qualify for section 179 depreciation qualify for bonus depreciation (section 168(k)). bonus depreciation is not limited to business income.  in figuring the limit on section 179 depreciation section 168(k) depreciation, also referred to as special depreciation, is subtracted first from business income.

for clarification of these 179 and 168(k)  rules see IRS PUB 946

https://www.irs.gov/pub/irs-pdf/p946.pdf 

 

TBF205860
Level 1

Does higher Q4 expense disqualify 179 deduction and require MACRS

Thank you, I would prefer to do a direct write off in the year of purchase over depreciating over time. Am I able to do so?

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