Q-1:

The barn I am depreciating is a specialized barn to be used for horses only. I've read somewhere that it could be all deducted in one year if that is so. Could the barn be written off against the yearly 100,000$ deduction for equipment or specialized barn in this case? Thanks.

A-1:

The Section 179 expensing election absolutely does not apply to barns or other buildings that have multiple uses.

I hope this clears up any confusion you have.

Kerry

Q-2:

Kerry, the 179 expensing thing, The barn was constructed for horses with horse stalls, horse bath, tack room and birthing room. Since it can only be used for horse , I thought it could all be expensed in one year. Did I miss something? Thanks.

A-2:

I have no idea who told you that a barn could be expensed in the first year.  That has never been possible.  I have prepared hundreds of tax returns with barns over the years, and would have known if they could be expensed.

So that you know this isn't just my personal opinion, I have just faxed you copies of two pages from my QuickFinder Depreciation reference book, where it lists what types of property qualify for Section 179 and which don't.  You will note that Barns is second on the list of types of property that DO NOT Qualify for Section 179 expensing.

Kerry

Q-3:

Kerry, I'm sorry. The info I had was that a specialized building such as a barn could be expensed in 5 YEARS.  Sorry 'bout that. Is that correct? Thanks.

A-3:

I have never hear of using such a short depreciation life.

I just checked my QuickFinder Depreciation reference book and it shows barns being depreciated using lives of from 15 to 25 years.  No mention of 5 years.

Is your new tax accountant suggesting these crazy things, or is it you coming up with them?  You may want to let him look it over and make any changes you want before mailing it in.

Kerry

Follow-Up:

No, I heard it from the people I bought the prefab barn from. Thanks.

My Reply:

That's a perfect example of why it's dangerous to believe tax advice from someone who will say anything in order to make a sale.  I constantly hear stories of big tax breaks being promised by car, boat and RV salespeople that turn out to be completely bogus.  Whether the salesperson intentionally lied or actually believed the information to be correct is irrelevant because the consequences are exactly the same. 

The smart thing to do when a salesperson makes such a claim is to verify its accuracy with an actual tax pro before making the purchase because it will be too late to do anything about it later.   Salespeople can't and won't stand behind their tax advice and you have no recourse when their tax claims evaporate.

Kerry

 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 5/24/2006 12:09:00 PM Send this post: