We are getting ready to pour concrete for our barn, and need to talk with an accountant who specializes in Equine businesses, specifically section 179. Our accountant does not specialize in that. We are in Michigan, but I don’t think it makes that big of a difference where they are. TIA!
I am not an accountant yet, I am still in school. But this is what I could dig up about section 179. I think your regular accountant should be able to answer your questions. I hope this helps.
List of Section 179 Non Qualifying Property. As we previously mentioned, most equipment will qualify for the Section 179 Deduction. Some of the property and equipment that does not qualify for the Section 179 Deduction is listed below.
■Real Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences.
■Air conditioning and heating equipment is generally not eligible for the Section 179 Deduction.
■Property used outside the United States generally does not qualify for the Section 179 Deduction.
■Property that is used to furnish lodging is generally not qualified for the Section 179 Deduction.
■Property acquired by gift or inheritance, as well as property purchased from related parties does not qualify for the Section 179 Deduction (No, you can’t sell equipment to yourself and qualify for Section 179).
■Any property that is not considered to be personal property, may not qualify for the Section 179 Deduction.
■Used Equipment (that is new to you) qualifies for Section 179, however used equipment does not qualify for Bonus Depreciation.
Expiration Notice: The ‘Small Business Jobs & Credit Act of 2010’ allowed taxpayers to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. This provision has expired and no longer available to small business owners, so please bookmark this page and check back regularly for possible updated details.
Not sure but maybe this can help ,
Investing in your business in 2011 may afford additional tax benefits. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Act) temporarily increases, from 50% in 2010 to 100% in 2011, the depreciation deduction available to a business that invests in certain personal property.
Internal Revenue Code Section 168(k) (Section 168(k)) now permits a business to deduct against its 2011 federal income tax liability 100% of the acquisition cost of qualifying personal property (i.e., machinery and other equipment) that the business places into service before December 31, 2011 (December 31, 2012 for certain assets). With a few exceptions, property that is placed in service in 2012 will qualify for a reduced 50% deduction, and the remaining 50% of the cost of such property will need to be amortized over the property’s useful life.
The Act also increases the limits on an alternative deduction that is available under Internal Revenue Code Section 179 (Section 179) for qualifying personal property. The Section 179 deduction is now subject to the following limitations in 2011: (i) a $500,000 cap on the total 2011 deduction, and (ii) a dollar-for-dollar phaseout of the deduction for each dollar above $2,000,000 that the business invests in qualifying personal property during 2011. Also, a Section 179 deduction may not create or increase a net operating loss deduction, while a Section 168(k) may. Note that in 2012 the Section 179 limitations will decrease to a $125,000 cap and a $500,000 phaseout threshold, and will further decrease after 2012 to a $25,000 cap and a $200,000 phaseout threshold.
Michigan businesses in particular are urged to seek professional advice before claiming a deduction under Section 179 or Section 168(k), since a Section 168(k) federal deduction may not be claimed against the Michigan Business Tax (MBT) and a Section 179 deduction may be claimed on the MBT only if it is claimed on the business’s federal tax return. Therefore, a Michigan business will need to compare the relative tax benefits of claiming a federal deduction under Section 168(k) and claiming a federal and state deduction under Section 179.
If this is significant to you, you probably really want to talk to a CPA. If your barn is owned by you (not rented/leased by you), a straight concerte pour that is the base for a whole barn is likely not subject to Section 179. If you are doing specific area, maybe you can use cost segregation in some way… there are weird little caveats like “paved barnyards used to keep livestock out of mud” whatever that specifically means… would have to look that one up! If you are talking about the concrete as in, we are about to start the build out - and you are embarking on the wide wide world of cost segregation, Section 179, and I haven’t looked to see if there will be any bonus depreciation for 2013 yet! Have fun!
One caveat to Section 179 is that Section 179 can not create an Net Operating Loss for a taxpayer. Your Section 179 will be limited to bringing your net income to zero. Bonus depreciation, if they extend it, or have already, can. Additionally, if you are building out a barn that is going to exceed the Federal asset limitations (and some states vary from Federal masively for Section 179) you will be prevented from taking it too.
this advice is not intended to be relied upon yada yada yada yada…
