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Robert-37x3

Section 179D Deduction Calculation In Sage FA 2016

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I'm having a disagreement with my company's internal tax accountant.  She is claiming that Sage FA is not treating the 179D deduction for the HVAC unit in a new building.

From what I can see & have rechecked Sage is calculating depreciation correctly.  

In her interpretation of IRS regulations, I need to not use the 179 Deduction fields and should just reduce the acquisition value of the asset.  And 

She has already had me adjust the general ledger balances to reduce the cost, accumulated depreciation and move the 179D amount from depreciation expense to the company's misc. income/expense account.

Is this or does this sound correct?

Has anyone else run into this as problem, that Sage FA is not treating 179 deductions correctly for IRS reporting?

.

  • 0
    It depends on the Placed-in-Service date. Prior to 2016, HVAC systems were not authorized for first year expensing under Section 179. However, the PATH Act of 2015 extended the 179 deduction to include HVAC property if the asset was placed in service after 12/31/2015.

    The SFA--Depreciation program does not automatically assume a deduction under Section 179. It is up to the manager of fixed assets to enter the amount to be expensed in the 179 field when creating the asset record or editing the record later such as at the end of the year. The entire amount of the HVAC can be expensed under Section 179 or some portion of the total amount.

    However, whatever deduction is claimed under Section 179 for the taxable year is subject to the IRS limitations and these limitations can vary from year to year. For this year, the total deduction amount allowed is $510,000 so long as you do not invest in more than $2,030,000 of new qualifying assets. If you exceed the investment cap, the amount allowed is correspondingly reduced. This is where the law can be somewhat complex to understand and you may want to refer to your CPA or tax attorney for guidance, especially at the end of the year.

    Bob

*Community Hub is the new name for Sage City