Question

Joe Moran worked in the construction business

throughout most of his career. In June of the current year, he

sold his interest in Ajax Enterprises LLC for a profit of $300,000.

Shortly thereafter, Joe started his own business, which involves

the redevelopment of distressed residential real estate.

In connection with his new business venture, Joe pur-

chased a dump truck at a cost of $70,000. The new business

struggled and showed a net operating loss for the year. Joe

is considering expensing the $70,000 cost of the truck under

§ 179 on this year’s tax return.

Question Evaluate Joe’s plan.

Please answer ASAP

Answer 1

Answer:

Since the income from all trades and businesses are in net loss hence there will be a carry forward of $70000 to the next year due to limitations of deduction. If you have reached your deduction limit on a given tax year, you'll want to know about carryover of disallowed deduction. For an unlimited number of years, a taxpayer may carry forward the amount of any cost of qualifying section 179 property elected to be expensed in a taxable year, but disallowed because of the taxable income limitation of that year. This carryover can be deducted in a future taxable year instead.