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Old 10-06-2016, 11:29 AM
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Question What method to use for elevator depreciation

My client installed an elevator into his office building for $20K. WHat method should I use to depreciate the cost? Can I take Section 179?



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Old 10-06-2016, 06:47 PM
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My client installed an elevator into his office building for $20K. WHat method should I use to depreciate the cost?=>you may apply sec 179 plus bonus depre+macrs or MACRS

Can I take Section 179?==========>> yes Most new business equipment can be either depreciated over its useful life or expensed immediately under IRC Section 179; To qualify for the section 179 deduction, TP?s property must be Tangible personal property.
A Section 179 deduction cannot generate a current year loss I mean Deductions under Section 179 are limited to net income generated from the property each year.The TP can simultaneously elect bonus depreciation on the elevator ; The bonus depreciation is 50% of the cost ,but it is not limited to income from the property. If the bonus depreciation and other deductions exceed income for the year, the property can generate a loss that may qualify for a carry back to recover taxes paid in a prior year.The Section 179 expense election and the bonus depreciation election also apply for AMT calculations. So there are no AMT adjustments required by electing to use either the bonus depreciation rules or the Sec 179 expensing rules.
Note; A gain on the disposition of section 1245 property, I mean sales price exceeds the adjusted basis of the elevator, shall be treated as ordinary income. is treated as ordinary income to the extent of depreciation allowed or allowable on the property and is taxed at ordinary tax rate. Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain.



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Old 10-07-2016, 11:15 AM
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Thank you so much. Can you give me a source for this information?



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Old 10-07-2016, 03:49 PM
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Quote:
Originally Posted by Jerald View Post
Thank you so much. Can you give me a source for this information?
https://www.irs.gov/publications/p946/ch02.html



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Old 10-09-2016, 10:53 AM
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Originally Posted by Wnhough View Post

It looks like this IRS page says that elevators do not qualify...
"Qualified retail improvement property:
Generally, this is any improvement to an interior portion of nonresidential real property if it meets the following requirements.
1. The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public.

2. The improvement is placed in service more than 3 years after the date the building was first placed in service.

3. The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building."

Please advise.

THank you so much.



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Old 10-09-2016, 07:46 PM
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Quote:
Originally Posted by Jerald View Post
It looks like this IRS page says that elevators do not qualify...
"Qualified retail improvement property:
Generally, this is any improvement to an interior portion of nonresidential real property if it meets the following requirements.
1. The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public.

2. The improvement is placed in service more than 3 years after the date the building was first placed in service.

3. The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building."

Please advise.

THank you so much.
You are correct;I guess you mean a Qualified leasehold improvement property . One of the major changes to Section 179 expensing is the ability to fully deduct qualified leasehold improvements.So, you can apply sec 179 deduction on a Qualified leasehold improvement property that is any improvement to an interior part of a building that is nonresidential real property;however, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to Any elevator or escalator or the enlargement of the building. Or etc. I mean aslongas the the elevator is installed in a qualified leasehold improvement pty, you can NOT apply sec 179 deduction to the elevator. You may check this with IRS( I am not sure how many of them understand the issue).



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