Section 179 again?

[pj87]

Hi,

So we missed a Section 179 deduction when filing our taxes for 2019 after the purchase of a vehicle used for work. However, we purchased another vehicle used for work in 2021, and did take the section 179 deduction. (After reading some of these questions, I now realize we should have also taken the special depreciation, but did not - so SIDE QUESTION: should we amend our taxes we just filed and add special depreciation?) 

So my real question is, can we go back and amend our 2019 taxes to add the Section 179 or add special depreciation? How does that affect the filing of 2021? And what should we do with our 2021 situation?

[Cynthiad66]

@pj87 - In a word YES you can amend both.  But it is more complicated than that because that amendment will affect the following years deduction, maybe.

If you go back to amend 2019 you must check to see how that affects your 2020 Vehicle deduction and may need to amend that return too.  

For 2021 you file your return based on the adjustment to 2019 and 2020 for the basis and deduction for depreciation.  Did you sell, trade or stop using the 2019 vehicle?  If so, you will need to report the sale/trade of the 2019 vehicle then recapture the depreciation previously taken.  So it may not be worth amending for 179 if you have sold or traded the 2019 vehicle.

To report the disposition of an asset, you have to indicate to the program, in the Business Vehicle Expense section, that you disposed of the vehicle  You then have to proceed through the rest of the screens and enter the sales price, cost, and prior depreciation equivalent

the election under section 179 and § 1.179-1 to claim a section 179 expense deduction for section 179 property may be made on an amended Federal tax return for the taxable year to which the election applies.​

[pj87]

Thank you for your response. No, we did not sell the vehicle from 2019, we now have both. Would you also recommend special depreciation? 

[ColeenD3]

So, both are still business vehicles?

As far as Section 179 and bonus depreciation, you have to ask yourself, what is your need at the time. If you have a large profit for that particular year and want to lessen it, accelerated depreciation is good. However, if you sell the vehicle before the useful life is up, you have to recapture the depreciation.

If your business is steady from year to year, regular MACRS gives you a deduction you can count on for 5 years.