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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I owned a c corp.for 25 years and was paid a salary. The corp.

Resolved Question:

I owned a c corp.for 25 years and was paid a salary. The corp. was dissolved this year and I received $65000 as long term capital gains from retained earnings from 4 years ago. Can this money qualify for a 179 first year expensing for another bisiness that I own?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

The total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit.

The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business.

Any cost not deductible in one year under section 179 because of this limit can be carried to the next year.

You may see more details in IRS publication 946 - http://www.irs.gov/pub/irs-pdf/p946.pdf

For section 179 qualifications - you need to use "related business income"

Distribution from C-corporation is not considered your business income - and may not be used in the section 179 limit calculations.

 

Sorry if you expected a different answer.

You may confirm the information provided by calling the IRS directly 1-800-829-1040

or Assistance for Businesses: 1-800-829-4933
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time

 

Let me know if you need any help.

 

Customer: replied 7 years ago.

I owned the stock of the corp, and operated and managed the corp. and earned all the income of the corp. from my professional services. With this additional information do you think that the dividend or capital gain from the corp. does not qualify because it is not a related business?

Expert:  Lev replied 7 years ago.

 

Dividends are not compensation for your professional services and may not be use for section 179 calculations.

 

C-corporation paid its own taxes and was able to claim a section 179 deduction.

You - as an employee of C-corporation earned wages for your professional services.

If you received wages from C-corporation and used a property as an employee of C-corporation for your job - you may deduct depreciation of that property.

As an employee - - your employee business expenses are deducted on the form 2106 and schedule A - subject of 2% floor limitation.

 

Let me know if you need any help with reporting.

 

Lev and other Tax Specialists are ready to help you

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