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jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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I plan on purchasing an SUV under section 179 in the month

Customer Question

I plan on purchasing an SUV under section 179 in the month of December where I will use it 100% for business purposes. I then plan on dissolving my sole owner llc next year because I have been offered a full-time job as an actual employee. Would I be better off not dissolving my llc so that I don't have to worry about the tax implications of transferring the vehicle to myself or can I dissolve the llc and not have to worry about tax implications of depreciating the vehicle during a normal business tax year? Thanks!
Submitted: 4 years ago.
Category: Tax
Expert:  jgordosea replied 4 years ago.

Sorry but even if you do not dissolve the LLC when the business use of the SUV falls below 50% the section 179 deduction would have to be recaptured.
It is the percentage of business use and not the ownership that will trigger the recapture.

The best manner to not worry about the implications of the 179 deduction is likely to not use section 179.
Only if the business use of the vehicle remains above 50% for the class life of five years will there be no recapture of the section 179 expense election.

Either you will need to plan on only having the benefit for the time the vehicle is more than 50% business use and plan on the recapture later added to income or perhaps consider not using the 179 expense election and just taking the allowed depreciation on the SUV when placed in service.

Please ask if you need clarification.
Thank you.