Ask Jason, 3/23/12

Q: Can a rental take bonus depreciation?

A: Yes, owners of rental properties can take bonus depreciation if the assets purchased are brand-new. Rental owners are NOT eligible for Section 179 deductions, though.

Q: If I had a 1099-G on my 2010 taxes do I need to have one for my 2011 taxes?

A: Not necessarily. Did you have any income in 2011 that would need reported on a 1099-G? For example, a state tax refund or unemployment compensation? If so, then you would have probably received a 1099-G. If not, then no, you wouldn’t get a 1099-G for 2011.

Q: How can a person get around the “primary residence” homebuyer tax credit issue?

A: I assume you are referring to the recapture rules that apply to people who have claimed one of the homebuyer tax credits. If the home you claimed the credit on stops being your primary residence any time within the 15-year repayment period on the 2008 version of the credit, or within 36 months on the 2009 and 2010 versions, the credit becomes repayable in full. I don’t know of any way to “get around” the primary residence issue. It either is or is not your primary residence. If you think the recapture rules apply to you, you probably want to pay a tax professional to help you.

Q: What is the Treasury Regulation that talks about hobby vs. business?

A: That would be Regulation 1.183-2, which lays out 9 tests for determining if an activity is engaged in with a profit motive. This is the basic hurdle to clear for trying to prove that an activity is a business and not a hobby. I have attached a pdf of 1.183-2 here for your reading pleasure.