Re: Single Person Sole Proprietorship Catch-22?

On Thu, 29 Mar 2007 18:50:30 -0500, "Shyster1040"
<Shyster1040@xxxxxxxxxxxxxxxxx> wrote:

I hardly think so. The issue is whether, at the time you purchased the
vehicle in question, it was purchased for the purpose of being used in
your trade or business, or was it purchased for personal use and then only
later on converted.

The determination is an objective one based on all the facts and
circumstances - i.e., what would a hypothetical reasonable person consider
your purpose to have been when you bought the vehicle?

Big -SNIP- here to save space. Thank you very much for the research
and case law. I am very impressed - and somewhat reassured by all
that information. You have certainly given me plenty to think about.

Let me start by saying that any half-reasonable person who looked at
the truck and equipment I bought (and all the other actions I took)
over a 37-day period in mid-2006 could only come to the conclusion
that I was going into business for myself. If that is the test, I am
golden. I was either going into business for myself or I had
completely lost my mind. Or, quite possibly, both.

On the other hand, it was a slow and bumpy start-up. I'm not going to
say it wasn't. This is my first business venture and Lord knows I
made some mistakes that delayed my opening. From a tax planning
perspective, I didn't really know what I was doing until it was too
late. There are definitely some openings here, such as the truck
insurance thing, that could be exploited by an auditor to kill my
Section 179 deductions. Sad to say, but I have been through audits
before and that theoretical reasonable person you talk of was nowhere
to be found. If they want to get me, they will certainly get me.

The main reason that I am writing here is that two different local
CPAs are telling me two completely different opinions regarding my
prospects of surviving an audit if I take those big Section 179
deductions. It is clearly a gray area in my case... and in the end,
it will have to be my decision. If common sense and reason prevail,
anyone will be able to see my intent (and the reality) that I was
starting a business with those big purchases. But the "conversion
from personal use" test, in a technical sense, could easily bring me
down. My business will likely survive either way, but it will
certainly look a lot different depending on which route I decide to
take.

Thanks again,
Don P.
.

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