Can I discount Section 179 equipment as charitable contributions?
I'm the sole sharehold of a corporation. I want to donate some equipment to a charity for tax purposes. However, I just bought the equipement 2 years ago and expensed the entire cost underneath section 179. The equipment would have be depreciated over 5 years if I had used MACRS. So can I do this? Would I have to recapture some of the unit 179 deduction? Please let me know where on earth I can find this information. Thanks.
Answers:
You can't deduct anything if it's fully depreciated as your cost font is zero.
First, if you donate the property for which you have already taken a full assumption, you will receive no further deduction. There will be no tax benefit.
Second, if you donate this property, you own removed it from business use and you must recapture some of the Section 179 deduction. So it will cost you money to donate it.
According to pub 946:
If you sell, exchange, or OTHERWISE DISPOSE OF [emphasis added] the property, do not figure the recapture amount below the rules explained in this discussion. Instead, use the rules for recapturing depreciation explained surrounded by chapter 3 of Publication 544 under Section 1245 Property. If the property is listed property (described contained by chapter 5), do not figure the recapture amount under the rules explained contained by this discussion when the percentage of business use drops to 50% or less. Instead, use the rules for recapturing excess depreciation contained by chapter 5 under What Is the Business-Use Requirement.
This would seem to penny-pinching that if you donate to charity, or at least if you take any conjecture, you would then have to directory 4797 to recapture excess depreciation. I think it would be easier to just not filch the deduction.
If you dispose the equipment before its seizure period, recapture of the depreciation applies.
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Answers:
You can't deduct anything if it's fully depreciated as your cost font is zero.
First, if you donate the property for which you have already taken a full assumption, you will receive no further deduction. There will be no tax benefit.
Second, if you donate this property, you own removed it from business use and you must recapture some of the Section 179 deduction. So it will cost you money to donate it.
According to pub 946:
If you sell, exchange, or OTHERWISE DISPOSE OF [emphasis added] the property, do not figure the recapture amount below the rules explained in this discussion. Instead, use the rules for recapturing depreciation explained surrounded by chapter 3 of Publication 544 under Section 1245 Property. If the property is listed property (described contained by chapter 5), do not figure the recapture amount under the rules explained contained by this discussion when the percentage of business use drops to 50% or less. Instead, use the rules for recapturing excess depreciation contained by chapter 5 under What Is the Business-Use Requirement.
This would seem to penny-pinching that if you donate to charity, or at least if you take any conjecture, you would then have to directory 4797 to recapture excess depreciation. I think it would be easier to just not filch the deduction.
If you dispose the equipment before its seizure period, recapture of the depreciation applies.
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