Good Morning!

I have read some of your responses to the 179 deduction and I appreciate you taking the time to help others make wise tax decisions. I have had a stellar year as an employee I have paid a small fortune in taxes to federal and state. I have also been fortunate to sell some stock options and cashed out a deferred comp plan. My taxes due next year are quite significant. As of this week I have formed a single member LLC and will be purchasing heavy machinery over 6,000 GVWR. The business will no doubt take a substantial loss this year due to the lateness of the year and startup expenses. Is it possible that my gross income including the stock sale is too much whereas disallowing me the opportunity to use the 179 deduction to its fullest? Is it possible that AMT could limit the amount of deduction I can take for the 179 deduction.

Again thank you for being so helpful in sharing your knowledge.

There is no high income phase-out for the Section 179 deduction that is claimed on the front of the 1040, as it sounds like yours would be. There is a phase-out for those who claim it on Schedule A, normally as an employee expense.

If you didn't catch the news today, the Section 179 deduction for business vehicles weighing under 14,000 pounds has just been lowered to $25,000 from the $102,000 maximum we had previously.

AMT is the most difficult tax to calculate without some actual number crunching. Capital gains and stock options can trigger the AMT. You should have your personal tax advisor run your numbers for you to see if that will be the case for you.

Another, probably less expensive, way to get a preview of your 2004 taxes is to get a copy of one of the cheapo 2003 tax programs, such as Turbo-Tax, and enter your 2004 figures. It won't be exact; but it will give you a pretty good ballpark idea of where you will be.

Good luck. I hope this helps.

Kerry Kerstetter

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/22/2004 02:44:00 PM Send this post: