Brett started a new construction business in August 2015. In connection with the new business, he purchased a new backhoe for $70,000 in September of 2015. The new businessis struggling and expecting to show a loss for 2015. Brett is considering expensing the $70,000 cost of the backhoe under §179 on the 2015 tax return. Brett has been awarded a large project for 2016, and expects to show a substantial profit for the year ending 12/31/2016. Evaluate the appropriateness of Brett’s plan. Explain your position.
(NOTE: In December 2014, Congress voted and approved to increase the §179 limit to $500,000. Your textbook currently states that it dropped from $500,000 in 2013, down to $25,000 in 2014 (page 8-13). Please base your answer on the revised 2014 limit of $500,000)