Impact of Death, Retirement, and Disability on the 179 Deduction

Let’s hear it for Section 179 of the IRS tax code!

It lets your business deduct the full price of qualifying equipment purchased or financed during the tax year!

EXAMPLE: Let’s say your proprietorship bought a pickup truck with a gross vehicle weight-rating greater than 6,000 pounds and a bed six feet or longer. Assuming you use the pickup 100-percent for business, you can expense the entire $55,000 cost!

That’s great, but what happens to that expensed amount if you die, retire, or become disabled before the end of its five-year depreciation period?

You’ll find easy-to-understand answers to these questions when you read my new article titled Impact of Death, Retirement, and Disability on the 179 Deduction.

Three ways our fact-filled article can help you:

1. We’ll tell you why dying is a good thing. No. We don’t want you to make death your strategy. We want you to continue life as a reader of the Tax Reduction Letter. But from a Section 179 tax perspective, your death works out beautifully. There are two reasons for this that we’ll explain when you read the full article.
2. You’ll learn what happens if you become disabled. Here’s the bad news: If you become disabled and allow your business-use of the pickup to fall to 50-percent or below (during its five-year depreciable life), you’ll have to recapture and pay taxes on the excess deductions (generated by the Section 179 deduction). And that’s just for starters. You’ll get the whole story when you read the full article.
3. We’ll explain the tax impact of retiring. When you retire, you have exactly the same problem that you’d have if you became disabled. In fact, with retirement, you disable your business involvement. That makes your pickup truck fail the more-than-50-percent-business-use test. The result? Recapture of the excess benefit using super slow straight-line depreciation. You’ll get all the details when you read the full article.