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Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 738
Experience:  Certified Public Accountant
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Own an interest in an LLC. spent over 5MM on equipment, how

Customer Question

Own an interest in an LLC. spent over 5MM on equipment, how does the Section 179 flow back down to me? Does the 2MM limit effectively end any section 179 that I can deduct or can I still deduct my share of the 5mm - i own 5% of the LLC.
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: Yes - how do intangible expenses flow back. the LLC spent 3MM on Intangibles do those just flow back on my allocated share of 5%
Submitted: 27 days ago.
Category: Tax
Expert:  Mark Taylor replied 27 days ago.

Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

Expert:  Mark Taylor replied 27 days ago.

The section 179 expense deduction is for small business. As you mentioned in your post there is a $2 million limitation. This means that once the cost of equipment goes above this amount the amount of available Section 179 expenses is reduced dollar for dollar. So if over $2.5 million is spent on equipment, the amount of potential Section 179 expense is eliminated. Did the LLC purchase new equipment?

What intangible expenses are you referring to? Are these intangible assets?

Customer: replied 27 days ago.
new equipment. Things like consultant fees, engineering costs, etc.
Expert:  Mark Taylor replied 27 days ago.

The LLC would be eligible to claim bonus depreciation of 50% of the cost of the new equipment. So although the LLC does not receive the benefit of Section 179 expense it does benefit from accelerated depreciation due to the bonus depreciation.

Expert:  Mark Taylor replied 27 days ago.

For the consulting fees and engineering fees are these associated with drilling costs?