Section 179 Deduction for Sole Prop LLC & W2 Earner

[kobiBear]

Hello -

Last year I converted my side photography business into a sole prop LLC while still continuing to work for my employer and receiving a W2. I purchased a truck for my business during the year (used for about 75% business) but did not generate any income. Can I proceed with the Section 179 deduction for the truck since I do have other "earned" income?

Thanks!

G 

[RobertB4444]

I'm afraid section 179 is income limited which means that you need to make at least as much money as your 179 deduction to take it.  

In your case I am afraid you will have to depreciate the vehicle (or 75% of it) over time.

[Mike9241]

your w-2 income will be counted as business income so if it's sufficient you'll get the 179 deduction.  but do you really need it?.     there is another depreciation method to get the deduction that is not dependent on business income and that is special deprecition. just leave the 179 amount blank and the special depreciation amount should compute automatically

[kobiBear]

Thanks Mike! So to clarify on Form 4562, I simply need to fill out Section II Line 14 with the asset(s)…leave the rest blank?

[GeorgeM777]

To follow-up @Mike9241, actually special depreciation (sometimes referred to a bonus depreciation) will automatically populate for you.  If you decide against it, you will have to affirmatively elect out of it.  Just to add what has already been stated, the special depreciation allows you to deduct 50% of the cost of the property in the first year, with the remaining 50% of cost expensed over the life of the property.  

However, the following property does not qualify for special depreciation:

• Property placed in service and disposed of in the same tax year.
• Property converted from business use to personal use in the same tax year acquired.
• Property converted from personal use to business use in the same or later tax year may be qualified property.
• Property required to be depreciated under the Alternative Depreciation System (ADS). This includes listed property used 50% or less in a qualified business use.

Based on your question, some of the exceptions listed above may impact your ability to take special depreciation.