Bird1
Level 2
12-07-2019
01:48 AM
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Farmer trades a piece of equipment that he previously took 179 depreciation-the trade value is $300,000. The Cost of new piece of equipment is $450,000. He is showing a loss of $100,000 on farm so 179 deduction is not available
He will have $300,000 gain from 4797 and a $100,000 loss on F- Tax due on $200,000 less standard deduction Am I missing something???????????
He will have $300,000 gain from 4797 and a $100,000 loss on F- Tax due on $200,000 less standard deduction Am I missing something???????????
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TaxGuyBill
Level 15
12-07-2019
01:48 AM
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Unfortunately, that sounds correct (assuming there is not Section 179 recapture).
This is not probably not a good idea for the long-term (due to SE tax), but 100% Bonus depreciation would be probably be available, which would create an NOL. But again, that isn't a great long-term answer due to SE tax.
