Amend for 179 with consent?

[Ranger]

New client sold his cow herd in 2011 and bought new farm machinery. Client had a loss on schedule F but large gain on 4797 and schedule D from sale of cows.

Prior tax preparer did not take section 179 to offset sale of cows as allowed and taxpayer had big tax liability.

As I understand it, an amendment for section 179 cannot be made without “Commissioners consent”.

Can someone tell me what that process involves?

[jainen]

>>As I understand it, an amendment for section 179 cannot be made without “Commissioners consent”.<<

That would have required a Private Letter Ruling. However, the regs did change quite a while ago. The 2011 version of Pub 946 says,

"For property placed in service in 2011, file Form 4562 with either of the following.

"Your original 2011 tax return, whether or not you file it timely.

"An amended return for 2011 filed within the time prescribed by law. An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. The amended return must also include any resulting adjustments to taxable income."

[kcjenkins]

Yep, you are in luck, it's been possible for several years to elect Sec 179 on an amendment.

[Ranger]

Thank you Jainen and KC for your responses. I have read several articles that conclude an amendment is not allowed for years beginning after 2010.

IRS Again Says Sec. 179 Elections Can Be Made on Amended Returns For Tax Years Beginning Before 2011

- by Roger McEowen

To erase any doubt on the matter, and confirming the point we have been making on this issue, the Chief Counsel's Office of IRS, in an Information Letter dated February 17, 2009, has stated that Section 7 of Rev. Proc. 2008-54, 2008-38, I.R.B. 722 provides for Sec. 179 revocations as well as elections without the Commissioner's consent, and before the issuance of Treasury Regulations on the matter. The letter notes that Rev. Proc. 2008-54 provides that for any tax year beginning after 2007 and before the last year provided in Sec. 179©(2) for revoking a Sec. 179 election by a taxpayer with respect to any Sec. 179 property, the taxpayer will be permitted to make a Sec. 179 election without the Commisioner's consent on an amended tax return for that taxable year. The Rev. Proc. also points out that taxpayer can rely on the guidance specified in section 7 until Treas. Reg. Sec. 1.179-5© is amended to account for the statutory change made in 2005 which extended the rules for revoking a Sec. 179 election for tax years beginning before 2008 to tax years beginning before 2011. The Information Letter concludes, "...a taxpayer is permitted to make a section 179 election without the Commissioner's consent on an amended federal tax return for a taxable year beginning after 2007 and before 2011..." Chief Counsel Information Letter, GENIN-141682-08 (Feb. 17, 2009).

[jainen]

>><taxable year beginning after 2007 and before 2011<

If your research shows that to be the final word, you'll have to request a private letter ruling or forego the election because the tax year in question is not before 2011.

[kcjenkins]

Strange, Pub 946 still says

For property placed in service in 2012, file Form 4562 with either of the following.

Your original 2012 tax return, whether or not you file it timely.

An amended return for 2012 filed within the time prescribed by law. An election made on an amended re-turn must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. The amen-ded return must also include any resulting adjust-ments to taxable income.

[Ranger]

Thanks Jainen, that answers my original question. Thanks to you and KC for posting the pub reference.

That is very interesting!