Taxpayers Must Prove Business Use of Assets to Claim Section 179 Deduction

Taxpayers who purchase assets for business use may be eligible to deduct the full cost in the year of purchase, subject to Section 179 limits. A taxpayer must prove the asset’s cost, where and when it was purchased, and the percentage of business use. Only the percentage of cost that applies to business use may be deducted.

The owner of an electrical services corporation purchased a forklift and a plow attachment, used mostly for business, and a boat that he said was used to entertain clients. The U.S. Tax Court approved a partial deduction for the business use of the forklift and plow. The boat was used mainly for personal purposes, so the court denied that deduction. (TC Memo 2023-114)

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