title>Tax Guru-Ker$tetter Letter Wizard Animation


Tax Guru-Ker$tetter Letter
Friday, November 26, 2004
Placed In Service Dates For Section 179


Thank you for your helpful website.
Can you please clarify what qualifies as an "in service" date for Section 179 election and the Bonus Depreciation for 2004?
If software and hardware are delivered to a taxpayer but not installed prior to 1-1-2005, can the taxpayer still take the election for 2004?
Does the existence of a sales order qualify?
Thanks for your help


Placed in service means actually being used before the end of the tax year.  Just having it on hand or on order is not good enough.

From a practical perspective, you do have to wonder how such things can be verified two or three years after the fact

For software, you should be careful to expense the normal recurring purchases, such as the annual QuickBooks or MS Office upgrades in a normal operating expense account.  These don't need to be capitalized and depreciated or counted against the Section 179 election.

Big customized software or programs expected to be in service for several years do need to be capitalized and depreciated or claimed under Sec. 179.

Your personal tax advisor should be assisting you with this.

Good luck.

Kerry Kerstetter


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