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1031 exchange
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jakescia
Posted 1/22/2017 13:24 (#5785811 - in reply to #5785535)
Subject: RE: 1031 exchange--So, instead of trading combines, you have to sell it.......



Oskaloosa, Iowa 52577

RE: 1031 exchange--So, instead of trading combines, you have to sell it.......

Now have 100K of 1245 recapture income.........

which is okay if can use section 179 expensing.

But let's say that the farm year was short, and just broke even.

Since the 100K of the old combine which you sold to the dealer in an allowed sale, since 1031 died.........no longer can trade and get deferred income recognition...........

....is NOT earned income or allowable income to pump up the "Business Income Limitation" allowance........you cannot write off even 100K of the new combine cost, in order to offset the 100K income upon the sale of the old.

Resultantly, you have 100K of income to pay tax on.......... as compared to merely a small amount of additional depreciation expense that would occur from depreciating the boot at regular rates, if one needed no 179 to offset other income.

Be careful what you wish for.

 

 

 

 

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