[hopefulcpa28]

Can someone shed some light on this for me? Please?

This is what the Becker update says: “For tax years 2010 and 2011, the taxpayer can expense up to $500,000 of the cost of qualifying property (generally up to $250,000 of qualified real property; personal property, and computer software). This maximum expensing amount is reduced dollar for dollar if it taxpayer purchases and places in service during the year more than $2,000,000 of qualifying property.

My questions are:

What is a qualifying property?

Does the purchase have to be from an unrelated party?

Thank you!!

[See Pee A]

Can't answer specifically, mostly because I took FAR about a month ago, but here's some general advice. Don't be overly concerned with specific numerical facts like limits and numbers and phase-outs and all that. Very little of it will actually be tested. Learn the basic BASIC numerical amounts and forget about the rest. Trying to remember everything will guarantee that you remember nothing. Come exam time, you will have a sea of numbers floating around your head and under that pressure it can become impossible to remember it all.

The most common flaw of test takers is to approach this exam like school. In school, we like to study every topic since our tests are comprehensive. The CPA is NOT comprehensive. It would be impossible to do that in 4 hours. Learn and practice and cement the basic ideas and exceptions and learn to apply them well. Once you have all that down, then worry about topics like this.

My second recommendation, if it's barely a page in the notes, and you don't see many MCQ's on it in your homework, it's probably not a major topic. Don't waste your time. Get the main idea and move on. Come back to it later if you have extra time to kill, otherwise keep practicing more important things.

BEC 86 (08/30/11)
FAR 84 (10/13/11)
REG 88 (11/08/11)
AUD 86 (11/29/11)

Exam prep - Becker self-study

[Yvonne570]

Correction: the realestate rules of the $250k – single and $500k for married individuals – is not a deduction and is completely different from section 179. The real estate rules you stated in bracket is gain on sale exclusion only if the sale results in a gain on sale – tax free of up to those amounts if eligible.

Section 179 has to do with depreciation (which does not apply at all with real estate). Wanted to clear that up and emphasize.

Section 179 for 2011 at a glance

2011 Deduction Limit – $500,000 (up from $250k previously). Good on new and used equipment, including new software.

2011 Limit on equipment purchases – $2 Million Dollars (up from $800k previously).

“Bonus” Depreciation – 100% (taken after the $500k deduction limit is reached). Note, bonus depreciation is only for new equipment. This can also be taken by businesses that exceed $2 million in capital equipment purchases.

The above is an overall, “simplified” view of the Section 179 Deduction for 2011. For more details on limits and qualifying equipment, as well as Section 179 Qualified Financing, please peruse this entire website.

I'm just really thankful to you that you brought this up because I totally forgot the section 179 deduction. The limits look like the real estate but completely different separate concepts.

https://www.section179.org/section_179_deduction.html

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[hopefulcpa28]

Thank you so much!!! Great overview that will be just enough!!

And you are totally right, real estate wouldn't matter when it comes to Section.

Good Luck!

[The Ace]

another important thing to remember is the section 179 deduction is limited to the Company's aggregate taxable income. Not sure if thats really mentioned in Becker. so if you buy $300,000 of qualifying equipment, and your income is only $210,000 you can only deduct up to the $210,000 as Section 179 in the current taxable year. Might be outside the scope of the exam but it is good to know this incase you get some tricky questions on the exam.

FAR - 79 - 11/24/10
AUD - 85 - 2/19/11
BEC - 83 - 7/25/11
REG - 74 - 8/22/11 Rematch 11/21/11
IL Candidate

[Anonymous]

Also the section 179 is aggregated on the 1040 for flow thru entities in the case of someone owning multiple interests in various flow thru entities. For example I own two S corps each passes thru $500k of 179 to me, I can only use $500K max subject to ten thousand other restrictions. Also for the taxable income limitation for an S corp it takes on the characteristics of a partnership in regard to adding back officers compensation/guaranteed payments before figuring the income limitation. See this stuff is simple (someone shoot me )

Good luck

[Yvonne570]

Think we will all be REG experts when we are done with this process. LOL.

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[hopefulcpa28]

Yes, Becker mentioned that…thanks for highlighting it. It's limited to the company's taxable income.

I feel like I'll remember every page by the time I'm done…studying it for the 3rd time does that to a person. Haha

[NYC_CPA]

This is what I have from Yaeger update, “Under the Small Business Jobs Act of 2010, within the thesholds($500,000 for 2010 and 2011), the act also allows taxpayers to expense upto $250,000(as part of the $500,000 limit) of the cost of Qualified Real Property, which are Cost of qualified leasehold improvement property, Qualified restaurant property and Qualified retail improvement property”. Hope this helps.

"I hate every minute of training, but I said, DON'T QUIT. Suffer now and live the rest of your life as a champion" - Muhammed Ali
FAR: 65(11/10), 80(02/11->Yaeger Audio!)
AUD: 73(05/15/11 Yaeger Homestudy), retake 76(08/31/11)
BEC: 73(08/05/11) Yaeger Homestudy, 71(11/30/11), retake 80(04/20/12)
REG: 80 (11/15/11) Yaeger Homestudy

[Author]

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