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New Co Acquisition of Assets-Are they eligible for Section 179 write off?

Jeff Kane's Profile

My question is if I set up a new company and buy the assets of another company, Can I write off $ 500,000 in 2011 for section 179. Assume assets are manufacturing and office equipment.

Answers

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

It's been a few years since I used section 179 for write offs and I'm not a tax expert, so check with your tax specialist, but typically this sort of business stimulus comes with some fine print which precludes or at least makes it harder for companies to buy one another just to take advantage of the acquired company's losses or ability to generate things like write-offs. Take NOLs as a case in point. Although many years back it was easier for companies to buy a failing company and apply their NOLs to the purchasing company's tax bill, that was made FAR more difficult to do once regulators noticed the abuse of that particular NOL loophole. I would look really hard at the current section 179 regs (and there have been a lot of changes here over recent years) to see whether there are such preclusions in place.

This is an interesting resource: http://www.section179.org/index.html. Aptly named site! I would also highly recommend you talk to a tax specialist as this is something you will want to do with full knowledge before diving in and finding yourself spending money on a transaction that will net you no benefits.

My tax advisor in Silicon Valley area is John Murphy at Mohler, Nixon (former Deloitte, great guy). I'm sure he'd be able to help you out. http://www.mohlernixon.com/.

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