Can I take Section 179 deduction against my spouses wages from another job?

[Brad4iu]

@Mike9241  Thanks for that information.  Just to clarify...How did you determine the $6k deduction of AGI? 

In my situation I am setting up a crypto mining business that I should have some slight income before the end of the year depending how quickly I can set it up.  For the sake of argument let's say I made $200 for the year.  The computer equipment will cost me about $31k.  My 2021 AGI from W-2s, etc. will be roughly $164k.  I was hoping to write-off a portion or all of the equipment to get my AGI to around $145k for the year... Is this possible or how is the write-off calculated in my situation (example provided above)?

Thanks!

[Brad4iu]

@Mike9241  In addition to my other post...Does it change the answer if I just go with a sole proprietorship instead of a SMLLC for 2021?...I'm assuming this is how this example would also work...assume hypothetical (not 100% real data):

$30k computers for 179 expense

$165k AGI from mine and my wife's W2s for our primary jobs

**Business started in time before the end of 2021; meeting all startup guidelines

**Revenue of $500 for this last month of the year

I could technically expense the $30k to bring down my AGI to $135k on my 1040?  

If so, Could I expense $20k in 2021 and remaining $10k in 2022?

Not looking for advice I just want to be sure I understand the concepts....Thanks for your time in advance!

[Mike9241]

no you can't. if you take 179 on $30K of computers and your business income is more than $30K (in your case it is) you must take all of the 179 the first year.   however, you can elect not to take 179 on the entire cost. then you must elect out of special depreciation 168 (k) (by law, generally special depreciation is 100% of the cost of qualifying assets reduced by any 179 taken unless you elect 50% or elect out completely.   so if you take $20K of 179 then 168(k) becomes $10k. total depreciation the first year $30K. if you took $0 of 179 then 168(k) the first year would be $30K.  

assuming you don't want the entire $30k deduction for 2021, when doing your return elect out of 168(k) special depreciation.  you can play around with the 179 amount to get to the AGI you want. what cost you don't take 179 and/or 168(k) on the first year is depreciated over the next 5 years. 

see pub 946 tables starting on page 71. computers use the 5-year column, 

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

[Brad4iu]

@Mike9241 Thank you so much Mike! This makes sense.  Thanks for your time in responding!

[Tomnician]

@Mike9241 you said, "if you take 179 on $30K of computers and your business income is more than $30K (in your case it is)" but @Brad4iu said his business income was only 400$

His W-2 wages were well in excess of 30K but not the Schedule C income from mining. 

Reading this entire thread has me confused. Can someone Section 179 assets, thus creating a net loss for their Schedule C, BUT THEN leverage their W-2 Income Taxes to pay overall less Taxes for the year? Reinforcing that the W-2 Wages have absolutely no relation to the Schedule C(in @Brad4iu cases his crypto mining).

[DaveF1006]

Yes, you can leverage other income against the 179 deduction taken for the year as long as your Adjusted Gross Income (AGI) does not reduce to zero. This is a little known caveat in the tax law that makes no sense because there is no relationship between Schedule C income and other income but no one has ever said the tax code is completely logical.

To give you an additional FYI, if your AGI was $20,000 for the year before you put in 179 deduction, you would only be able to claim $20,000 of the deduction and then depreciate the remainder over a five-year period. 

@Tomnician