Ask Jason – 3/30/12

Q: May a cash rent landlord take a section 179 deduction and or bonus depreciation?

A: A landlord of any type cannot take Section 179 but CAN take bonus depreciation on the purchase of brand-new assets.

Q: Can a taxpayer claim the 5th Amendment against self-incrimination during an audit?

A: No. The Tax Court has ruled that the 5th Amendment usually doesn’t apply to routine tax cases that don’t involve criminal charges. This Dinesen Tax Times story has more details.

Q: What are prior Iowa Section 179 limits?

A: For 2010 and 2011, Iowa coupled fully with federal Section 179 limits ($500,000). In prior years, Iowa did not allow the full federal Section 179 deduction. For 2009, the Iowa 179 limit was $133,000, while the federal limit was $250,000. Iowa Form 4562A might help with what, if any, adjustments need made for Section 179 deductions before 2009.

Q: How do I turn someone in to the IRS?

A: The IRS has a “whistleblower” program. This page on the IRS website provides more information.

Q: My home was vacant for a year. Is it still considered a rental property?

A: There are way too many variables involved, so I can’t give a definitive yes or no answer. The answer is, maybe. This article talks about a Tax Court case where the Court ruled in favor of a rental owner whose home sat vacant but was still considered a rental.

Q: Is drag racing considered a small business?

A: Again, the answer is “maybe.”  If you have a legitimate business venture, then you probably have a business. But if it’s a hobby and you’re just looking to deduct a bunch of expenses on your tax returns, then you’re out of luck, as this Dinesen Tax Times article talks about.

The answers provided in this segment are intended to be general in nature and do not constitute tax advice. Please pay a tax advisor to advise you about your unique situation before making any financial decisions.

Have a tax question? Click here to submit a question. Please note, I cannot personally provide a specific answer to your question by e-mail. (Ask Jason has been discontinued.)