Sec 179 Purchase Date vs Place in Service Date

[frederickwong]

Sec 179 said that in order to qualify, the asset must be purchased and placed in service within the same year. What if the asset was purchased (paid) before the end of the year in December and was delivered after the year ended (say in January)?

Can I still use Sec 179 deduction? If yes, which year? The year I purchased the equipment, or the year it was placed in service?

Thank you!

[MinhT1]

You can only claim the 179 deduction for that equipment in 2021, the year it is placed in service.

[JOHNHG]

Can you please explain further?  Do we enter the asset in the following year (say 2025 taxes) and enter the purchase date for the previous year at that time (2024) ?  I always thought deductions etc must be taken in the year a purchase was made?  Do we deduct anything for current year taxes and depreciate the following, or wait?
Thank you.

[Vanessa A]

Yes.  On your 2025 return, you will enter the purchase date as 2024 and your put to use date as 2025.  

In general that is correct.  However, when you have assets that are depreciated, the put in use date is the date that you use instead of the purchase date.  If you bought items that are not assets, like say paper and pens, you would deduct them in the year you purchased them. 

 It is similar to someone who has a house they turn into a rental property.  If they lived in the house for 5 years and paid $200,000 in 2019, then in 2024 they started renting it out, they would use the $200,000 cost basis on their 2024 return as the price even though they did not pay that in 2024.