Q:

Subject: C Corp and LLC

I saw some of your research online and have a quick question.  

Here is my situation.   I currently have 2 LLC’s operating as partnerships.   We are considering making 1 a C Corp in order to take advantage of 15% tax bracket.   There are other benefits of making one a C Corp as well.  If we make 1 a C Corp, can we take a full 179 deduction at the C Corp and again at the partnership level?   Essentially we would be getting the 179 deduction doubled, once inside the C and once at the member level of the LLC?   I cannot find any IRS ruling or anything relating to this.   Any help would be greatly appreciated.

Thanks,

A:

In a way, you almost make it sound as if you would be claiming two Section 179 deductions on the same assets. 

What I have long been trying to explain as a big benefit of using C corps is the fact that they are eligible for their own full Section 179 allowance and the shareholders are also eligible for their own full allowance on their 1040s.  This does double the overall potential Section 179 deduction for single owner C corps.  The potential multiplier would be more for multi-owner C corps. 

This is why it is important to divide new business asset purchases between those made in the corp name and in the name of the shareholder or other entity (partnership or S corp).

I discussed this on my main website in a number of places:

http://www.taxguru.org/incometax/Rates/Sec179.htm

http://www.taxguru.org/corps/scorp.htm

Good luck.  I hope this helps.

Kerry Kerstetter

 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 7/16/2005 12:41:00 PM Send this post: