Discussion:Sec 179 on Amended Return

(c) Section 179 property placed in service by the taxpayer in a taxable year beginning after 2002 and before 2008 —(1) In general. For any taxable year beginning after 2002 and before 2008, a taxpayer is permitted to make or revoke an election under section 179 without the consent of the Commissioner on an amended Federal tax return for that taxable year. This amended return must be filed within the time prescribed by law for filing an amended return for such taxable year.

If you filed your return on time for the 2006 tax year and did take or use Section 179 expense you could in a later year file an amended return revoking that election.

1. Sec. 179 may be claimed on the original or amended return for 2006. The original return need not be filed timely. The amended return must be filed within the normal 3-year limtations period specified in Sec. 6511.

2. The amended return can be filed within 3-years to either make an original Sec. 179 election or to increase the original elected amount.

This seems to be what that Regulation link 1.179-5 seems to say, at least to me. I guess I get confused easily.

Extensions and Amended Returns

You may claim Section 179 deductions up to the due date (including extensions) for filing your taxes for the tax year you are claiming the deduction. This means that you are not allowed to claim Section 179 for previous tax years.

However, you MAY amend a current year return - for example, for tax year 2008, the maximum extended due date (with extensions) for filing is October 15, 2009. You file your 2008 return on Sept. 1, 2009 and then realize you didn't utilize the Section 179 deduction, you still have until the Oct. 15, 2009 deadline to file an amended tax return to claim the deduction. But you *cannot* go back and amend 2007's return and add Section 179 deductions (as that deadline passed 10/15/2008).

Thus, when 2011 finally arrives, the JGTRRA and AJAC rules will go away and we will go back to the old rules which say that any Sec. 179 election must be made on an original return (whether or not timely) or an amended return filed by the extended due date of the original return.

The bottom line is that under AJAC and JGTRRA, it is not too late to amend a 2006 return to elect or increase a Sec. 179 election. However, starting with the 2011 tax year, this will no longer be possible since we are going back to the old rules. Again, see the latest version of Reg 1.179-5(c) (as modified by Rev. Proc. 2008-54).

"Caution: The Treasury has not yet amended Reg § 1.179-5 to reflect changes made by P.L. 110-28, P.L. 109-222, P.L. 108-357"

No wonder there is confusion.

I seem to recall someone explaining JGTTRA and AJAC as forms of audit protection. If the Service capitalized an expense, the taxpayer could amend and elect 179.