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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Im a single member Limited Liability Company and would like

Resolved Question:

I'm a single member Limited Liability Company and would like to buy a home to renovate and sell. In order to qualify for the new 30 billion dollar stimulus benefit of $500,000.00 write off for capitol investments would I need to do a small business loan in my LLC tax ID number or can I just go down and obtain a conventional loan in my wife and I name. Also would this even qualify as a capitol investment? Since I'm buying it to renovate and then going to sell it 6 months from now.
Submitted: 3 years ago.
Category: Tax
Expert:  RD replied 3 years ago.
Chat Conversation Started
RD :

You are correct that the bill increases the maximum amount a taxpayer may expense under IRC § 179 to $500,000 and increases the phaseout threshold amount to $2 million for tax years beginning in 2010 and 2011. The first-year 50% bonus depreciation available under IRC § 168(k) is extended for one year to apply to property acquired and placed in service in 2010 (or 2011 for certain long-lived and transportation property)

RD :

However,


To qualify for the section 179 deduction, your property must be one of the following types of depreciable property.




  1. Tangible personal property.




  2. Other tangible property (except buildings and their structural components) used as:




    1. An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services,




    2. A research facility used in connection with any of the activities in (a) above, or




    3. A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities.






  3. Single purpose agricultural (livestock) or horticultural structures. See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures.




  4. Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum.




  5. Off-the-shelf computer software.



RD :

Residential rental property or commercial rental property bought for the purpose of renovation and resell does not qualify as a Sec 179 property and hence you cannot claim $500K writeoff on such investments

RD :

Btw, the business loan should be in LLC name and your wife can be a guarantor on the loan. In most cases since the property is in LLC name, banks would also want the loan structured in this manner

Customer :

so this would be for trucks and computers not property?

RD :

Yes, that is correct, It would be for machinery, truck, equipments, computers etc.

Customer :

Does it matter that it was not going to be rental property

RD :

No, It would not change. Real property does not qualify for Sec 179 expense

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and 3 other Tax Specialists are ready to help you

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