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(SP-179: 1. 108'; b. 13'; dr. 4'6"; s. 22 k.; a. 1 6-pdr., 2 ma)
Privateer (SP-179) was built in 1917 by Gas Engine and
Power Co., and C. L. Seabury Co., Morris Heights, N. Y., for R. A. C. Smith; delivered under charter to the Navy 25 May 1917; and commissioned 15 August 1917, Ens. H. P. Wills, USNRF, in command.
Privateer was immediately assigned to the 3rd Naval
District where she served on section patrol for most of World War I. On 15 June 1918 she escorted the new submarines N-4 and N-7 from Bridgeport, Conn., to the New York Navy Yard. In early 1919 she was attached to the Rockaway Naval Air Station, Rockaway, N.Y. Privateer was ordered 28 July 1919 to Squadron 19, 3rd District Naval Force where she remained until January 1930. During this period she was reclassified YP-179.
Privateer decommissioned at Norfolk, Va., 5 February 1930
was struck from the Navy Register 7 March 1930; and was transferred to USSB 30 June 1930.
Privateer SP-179 - History
Modern privateering began in the age of Queen Elizabeth I during the Anglo-Spanish War (1585-1604). After the success and profit of Sir Francis Drake, adventurous Englishmen flocked to their ships and set out hunting Spanish ships, heralding the birth of a new war weapon. It was 150 years later when the Americans took up the tradition and set out against the French in the French and Indian War (1754-1763). It was at this time the American privateering culture was established. From Boston and Philadelphia, most notoriously Newport and especially New York, hundreds of merchant ships became warships, encouraged by colonial governors (Governor John Wanton of Rhode Island was himself a former privateer). The advantage at the time was that privateers were no cost to the government they brought their prizes back to port to be sold, half the share went to the ship owner(s) and the other half was divided amongst the crew. Privateers, like pirates, sought to make their fortune at sea, but at the same time fought for their king and country. This was an especially lucrative enterprise for ship owners as well, who sold shares in privateers like stock, and commonly owned portions in the ventures of multiple privateers.
The Golden Age of American Privateering was undeniably the American Revolution. Hundreds of ships took to the seas to hunt the British, surpassing the French and Indian War and far more than would ever launch again. A record 449 privateers were recorded launching in a single year compared to a maximum 34 Continental Navy vessels. The far more valuable weapon was the economic impact of the privateers, whose record includes the capture of about 800 vessels in the name of the Continentals and a loss to British merchantmen of more than 2.2 million pounds (a far more incredible sum then than it is today). The economic impact upon British shipping was so devastating that the British mercantile classes became the leading protestors of the war against the rebel Americans. There was a significant military aspect to their efforts as well. Privateers were important to the Americans by preventing the landing of British troops and seizing supplies that went to the Continental Army or Navy. A well-documented case involves Commerce, commissioned by the rebel government in Charleston to intercept Betsy. Commerce took the ship’s large shipment of gunpowder and spiked her guns, creating an embarrassing and painful incident for the already dire British situation off the coast of the southern colonies. The commissioning of privateers was strategically used to starve populations of Tories in the South as well, particularly in South Carolina and Georgia. As long as the Royal Navy had to concern themselves with the privateers, they could not be used against the American war effort.
“Everything continues exceedingly dear, and we are happy if we can get anything for our money, by reason of the quantity of vessels taken by the Americans. A great fleet of vessels came from Ireland a few days ago. From sixty vessels that departed from Ireland not above twenty-five arrived in this and neighboring islands, the others it is thought, being all taken by American privateers. God knows, if this American war continues much longer we shall all die of hunger.” Englishman in Grenada, 1777
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Privateer, privately owned armed vessel commissioned by a belligerent state to attack enemy ships, usually vessels of commerce. Privateering was carried on by all nations from the earliest times until the 19th century. Crews were not paid by the commissioning government but were entitled to cruise for their own profit, with crew members receiving portions of the value of any cargo or shipping that they could wrest from the original owners. Frequently, it was impossible to restrain the activities of privateers within the legitimate bounds laid down in their commissions. Thus, it often became difficult to distinguish between privateers, pirates, corsairs, or buccaneers, many of whom sailed without genuine commissions.
In the late 16th century, English privateers such as Sir John Hawkins and Sir Francis Drake were encouraged or restrained, according to prevailing political conditions. With the growth of a regular navy, however, the British Admiralty began to discourage privateering because it was more popular among sailors than was serving in the navy. At this same period, Dutch Sea Beggars and French Huguenot privateers were active. Throughout the 17th century, English buccaneers in the West Indies, such as Sir Henry Morgan, sometimes sailed as genuine privateers. From 1690, French privateers from Dunkerque (Dunkirk) and Saint-Malo were particularly active against English commerce. During the American Revolution the American colonists found it difficult to form a new navy because more than 1,000 privateers were already licensed. The popularity of privateering continued in the War of 1812 between Great Britain and the United States when, for example, the U.S. brig Yankee alone seized or destroyed $5,000,000 worth of English property. France used many privateers during the French Revolutionary and Napoleonic wars.
In 1856, by the Declaration of Paris, Great Britain and the other major European countries (except Spain) declared privateering illegal. The U.S. government refused to accede, holding that the small size of its navy made reliance on privateering necessary in time of war. The rise of the American navy at the end of the 19th century and the realization that privateering belonged to an earlier form of warfare prompted the United States to recognize the necessity of finally abolishing it. Spain agreed to the ban in 1908.
At the Hague Peace Conference of 1907 it was then stipulated, and has since become part of international law, that armed merchant ships must be listed as warships, though there have been various interpretations of the word armed. The ambiguous status of the privateer has thus ceased to exist—the state now assumes full responsibility for all converted ships engaged in military operations.
Privateers Damaged the British Economically and Politically
English naval officer Horatio Nelson boarding an American privateer in a violent gale, while a lieutenant on the HMS Lowestoft in 1777.
Not only did American privateers’ hit-and-run attacks severely disrupt British commerce from the Gulf of St. Lawrence to the Caribbean Sea they also operated close to British shores, even ambushing merchant ships in the English Channel. The result: Maritime insurance rates and the prices of imported goods in Britain began to soar.
Privateers’ success in looting and hijacking ships angered Britain’s wealthy merchants, as well as consumers facing higher costs. Denying the legitimacy of the Continental Congress or its right to license privateers under international law, many British lawmakers viewed the American commerce raiders no differently than pirates. Parliament passed the Pirate Act of 1777 that allowed American privateers to be held without trial and denied them the rights of prisoners of war, including the possibility of exchange. The measures spurred an anti-war movement among the segment of the British public that saw the country compromising its moral values in its treatment of enemy combatants and its decision to license its own privateers and revive the forced conscription of British citizens into the navy.
In the wake of the Pirate Act, the Royal Navy captured or destroyed hundreds of American privateers. Most of the 12,000 seamen who died in British prison ships during the war were privateers, and the losses left behind a generation of widows and orphans in some New England seaports. In Massachusetts, according to Patton, Newburyport lost 1,000 men in the destruction of 22 privateering vessels, while Gloucester lost all 24 of its registered privateers, cutting the population of adult males in half over the course of the war.
Pride of Baltimore II is a reconstruction of a Baltimore Clipper, a class of sailing vessels that were the most successful American privateers in the War of 1812. These privately owned ships were authorized by the American government to prey on English merchant shipping, and their success was one of the factors influencing the British to sign the Treaty of Ghent, ending the war. Pride II was built in Baltimore in 1988 based on historic construction details from the early nineteenth century, and has sailed more than 200,000 nautical miles with the dramatic topsail schooner rig preferred by the Baltimore Clippers.
In commemoration of the bicentennial of the War of 1812, Pride of Baltimore, Inc. developed an educational display on the role of privateers in the War of 1812. Funded by the Maryland Heritage Areas Authority, the display consists of 16 units explaining this largely forgotten chapter of the American war effort. It provides details on the Baltimore-based privateer vessels and their captains, and explores the risks and rewards of privateering as a business for the ship owners. Designed by David MacDonald of the Maryland Historical Society, it is lavishly illustrated using historic images.
Introduction to the Pride of Baltimore II and Privateer History Display panels
Download Panel 1 PDF
200 years ago, the young United States consisted of only 18 eastern states, but was starting to expand westward after the Louisiana Purchase. Native Americans resistance was thought to be encouraged by the British in Canada.
Download Panel 2 PDF
By 1812, Napoleon had conquered much of Europe, but Britain’s strong navy prevented a French invasion. Both Britain and France blockaded neutral shipping to their enemy, crippling the American ports and trade. British navy captains stopped American ships on the high seas and “impressed” Americans to serve unwillingly on British ships, leading to calls for war.
Download Panel 3 PDF
President Madison called on Congress to declare war on Britain in June, 1812, in spite of the weak American navy. From the outset, the Americans planned on utilizing the ancient practice of privateering, commissioning privately owned vessels to capture enemy merchant ships for profit.
Download Panel 4 PDF
While pirates have become romanticized and idolized by the media, historically they have been nothing more than sea-going robbers. Privateers, in contrast, were legally commissioned by their governments to capture enemy vessels only in wartime, and American privateers were held accountable to rules limiting their activities.
Download Panel 5 PDF
Baltimorean Joshua Barney was one of the first American privateers to act in the War of 1812. A veteran naval officer and privateer in the Revolutionary War, Barney’s four month privateering cruise along the East Coast and Caribbean in 1812 resulted in 20 captures worth more than 1.5 million dollars.
Download Panel 6 PDF
Baltimore became a center of privateering in 1812 due to its history of shipbuilding for the Chesapeake Bay. In contrast to the rugged sea conditions of northern Europe, the Chesapeake fostered the design of fast and maneuverable schooners suited to its mild winds and narrow channels. In the hands of skilled captains, these ships could easily out sail the British navy ships sent out to catch them in the Atlantic.
Download Panel 7 PDF
Privateering vessels like the Baltimore Clippers were owned by businessmen who wanted to make a profit from financing the construction and outfitting of a suitable ship. They were required to post a bond with the government to ensure compliance with privateering laws. Owners and crews were paid only if their ship captured legitimate “prizes”.
Download Panel 8 PDF
Since captains were required to record details of their captures, historians have been able to show that privateering was a risky business. While a few ships and captains earned a profit for their owners, most did not. One problem was that after capturing a prize, it had to be sailed to an American port for legal sanction as a prize, and some captured prizes were recaptured by British navy ships before reaching port.
Download Panel 9 PDF
Much of our history of American privateers in the War of 1812 comes from the newspaper Weekly Register published by Baltimorean Hezekiah Niles. These accounts show that many American privateers returned home without even sighting a British merchant ship, others were captured by the British, while others were lost at sea.
Download Panel 10 PDF
Thomas Boyle was the most famous Baltimore privateer captain. A successful merchant captain before the war, Boyle was hired to command the Baltimore schooner Comet as a privateer in July, 1812. His first cruise lasted three months and resulted in four prizes his crew sailed to the US and sold for a handsome profit.
Download Panel 11 PDF
By 1813 the British were able to free up some ships and men from the conflict in Europe, some of which were sent to the Chesapeake. The Royal Navy raided Chesapeake towns for supplies and fought skirmishes with local militia, culminating in the burning of Washington in August, 1814.
Download Panel 12 PDF
Captain Thomas Boyle commanded the Baltimore schooner Comet on two more privateering cruises, largely in the Caribbean. Although he could out sail the British pursuing him, most of the merchant ships he captured were recaptured by the British. In July, 1814, Boyle took command of a larger Baltimore Clipper termed Chasseur, whose privateering success brought her renown as the “Pride of Baltimore”.
Download Panel 13 PDF
After the British easy success in destroying the young American capital of Washington, an obvious next target was Baltimore, the third largest city in the country, and a center of privateering. Troops marching on the city encountered well-organized resistance, and strongly fortified Fort McHenry withstood heavy naval bombardment, leading the British to abandon the attack and giving us the Star Spangled Banner.
Download Panel 14 PDF
Captain Thomas Boyle’s privateer Chasseur cruised British home waters in the summer of 1814, capturing prizes and frustrating their Royal Navy pursuers. Chasseur home in the fall, but in December set out on a winter cruise of the Caribbean. Eight prizes were captured before Chasseur battled and beat a stronger British schooner sent out to pursue American privateers. Chasseur had a triumphant return to Baltimore in March 1815 after learning about the end of the war.
Download Panel 15 PDF
With the end of the war, privateer vessels needed to find a new business plan, but their limited cargo capacity meant they couldn’t compete with slower, wider, merchant vessels. Baltimore clippers became privateers for emerging South American nations, smugglers running opium from China, and in the illegal transport of slaves. However, since they were not built for durability, few remained after 1830.
Display Panel 16 PDF
This project was supported by a grant through the Maryland Heritage Area Authority.
Concept and research was conducted by Pierre Henkart. Text and graphic design is credited to David McDonald.
2. Electing the Section 179 Deduction
You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions.
. Estates and trusts cannot elect the section 179 deduction. .
This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. It also explains when and how to recapture the deduction.
544 Sales and Other Dispositions of Assets
Form (and Instructions)
4562 Depreciation and Amortization
4797 Sales of Business Property
See chapter 6 for information about getting publications and forms.
What Property Qualifies?
To qualify for the section 179 deduction, your property must meet all the following requirements.
It must be eligible property.
It must be acquired for business use.
It must have been acquired by purchase.
It must not be property described later under What Property Does Not Qualify .
The following discussions provide information about these requirements and exceptions.
To qualify for the section 179 deduction, your property must be one of the following types of depreciable property.
Tangible personal property.
Other tangible property (except buildings and their structural components) used as:
An integral part of manufacturing, production, or extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services
A research facility used in connection with any of the activities in (a) above or
A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities.
Single-purpose agricultural (livestock) or horticultural structures. See chapter 7 of Pub. 225 for definitions and information regarding the use requirements that apply to these structures.
Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum.
Off-the-shelf computer software.
Qualified section 179 real property (described below).
Tangible personal property.
Tangible personal property is any tangible property that is not real property. It includes the following property.
Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs.
Gasoline storage tanks and pumps at retail service stations.
Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals.
Portable air conditioners or heaters placed in service by you in tax years beginning after 2015.
Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging (except as provided in section 50(b)(2)).
The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law.
Off-the-shelf computer software.
Off-the-shelf computer software is qualifying property for purposes of the section 179 deduction. This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. It includes any program designed to cause a computer to perform a desired function. However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software.
Qualified section 179 real property.
You can elect to treat certain qualified real property you placed in service during the tax year as section 179 property. If this election is made, the term "section 179 property" will include any qualified real property that is:
Qualified improvement property as described in section 168(e)(6) of the Internal Revenue Code, and
Any of the following improvements to nonresidential real property placed in service after the date the nonresidential real property was first placed in service.
Heating, ventilation, and air-conditioning property.
Fire protection and alarm systems.
Qualified improvement property.
Generally, this is any improvement to an interior portion of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service.
Also, qualified improvement property does not include the cost of any improvement attributable to the following:
The enlargement of the building,
Any elevator or escalator, or
The internal structural framework of the building.
Property Acquired for Business Use
To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify.
Partial business use.
When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. Use the resulting business cost to figure your section 179 deduction.
May Oak bought and placed in service an item of section 179 property costing $11,000. She used the property 80% for her business and 20% for personal purposes. The business part of the cost of the property is $8,800 (80% × $11,000).
Property Acquired by Purchase
To qualify for the section 179 deduction, your property must have been acquired by purchase. For example, property acquired by gift or inheritance does not qualify.
Property is not considered acquired by purchase in the following situations.
It is acquired by one component member of a controlled group from another component member of the same group.
Its basis is determined either:
In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or
Under the stepped-up basis rules for property acquired from a decedent.
It is acquired from a related person.
Related persons are described under Related persons, earlier. However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears.
Ken Larch is a tailor. He bought two industrial sewing machines from his father. He placed both machines in service in the same year he bought them. They do not qualify as section 179 property because Ken and his father are related persons. He cannot claim a section 179 deduction for the cost of these machines.
What Property Does Not Qualify?
Certain property does not qualify for the section 179 deduction. This includes the following.
Land and Improvements
Land and land improvements do not qualify as section 179 property. Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences.
Even if the requirements explained earlier under What Property Qualifies? are met, you cannot elect the section 179 deduction for the following property.
Certain property you lease to others (if you are a noncorporate lessor).
Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code.
Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income.
Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months.
Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. This rule does not apply to corporations. However, you can claim a section 179 deduction for the cost of the following property.
Property you manufacture or produce and lease to others.
Property you purchase and lease to others if both the following tests are met.
The term of the lease (including options to renew) is less than 50% of the property's class life.
For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property.
How Much Can You Deduct?
Your section 179 deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. These limits apply to each taxpayer, not to each business. However, see Married Individuals under Dollar Limits , later. For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. See Do the Passenger Automobile Limits Apply? in chapter 5.
If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct.
Trade-in of other property.
If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid.
Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van.
Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200).
The total amount you can elect to deduct under section 179 for most property placed in service in tax years beginning in 2020 generally cannot be more than $1,040,000. If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $1,040,000. You do not have to claim the full $1,040,000.
. The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. .
. After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. .
In 2020, you bought and placed in service $1,040,000 in machinery and a $25,000 circular saw for your business. You elect to deduct $1,015,000 for the machinery and the entire $25,000 for the saw, a total of $1,040,000. This is the maximum amount you can deduct. Your $25,000 deduction for the saw completely recovered its cost. Your basis for depreciation is zero. The basis for depreciation of your machinery is $25,000. You figure this by subtracting your $1,015,000 section 179 deduction for the machinery from the $1,040,000 cost of the machinery.
Situations affecting dollar limit.
Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. The general dollar limit is affected by any of the following situations.
The cost of your section 179 property placed in service exceeds $2,590,000.
Your business is an enterprise zone business.
You placed in service a sport utility or certain other vehicles.
You are married filing a joint or separate return.
Costs Exceeding $2,590,000
If the cost of your qualifying section 179 property placed in service in a year is more than $2,590,000, you must generally reduce the dollar limit (but not below zero) by the amount of cost over $2,590,000. If the cost of your section 179 property placed in service during 2020 is $3,630,000 or more, you cannot take a section 179 deduction.
In 2020, Jane Ash placed in service machinery costing $2,640,000. This cost is $50,000 more than $2,590,000, so she must reduce her dollar limit to $990,000 ($1,040,000 − $50,000).
Enterprise Zone Businesses
An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. For more information, including the definitions of "enterprise zone business" and "qualified zone property," see sections 1397A, 1397C, and 1397D of the Internal Revenue Code.
The dollar limit on the section 179 deduction is increased by the smaller of:
The cost of section 179 property that is also qualified zone property placed in service in the tax year beginning before January 1, 2021 (including such property placed in service by your spouse, even if you are filing a separate return).
You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,590,000 (explained earlier).
The increased section 179 expense deduction has been terminated for property placed in service in tax years beginning after December 31, 2020.
Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $25,900 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2020. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,900 limit does not apply to any vehicle:
Designed to seat more than nine passengers behind the driver's seat
Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible from the passenger compartment or
That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,590,000. You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you.
Jack Elm is married. He and his wife file separate returns. Jack bought and placed in service $2,590,000 of qualified farm machinery in 2020. His wife has her own business, and she bought and placed in service $300,000 of qualified business equipment. Their combined dollar limit is $740,000. This is because they must figure the limit as if they were one taxpayer. They reduce the $1,040,000 dollar limit by the $300,000 excess of their costs over $2,590,000.
They elect to allocate the $740,000 dollar limit as follows.
$703,000 ($740,000 x 95%) to Mr. Elm's machinery.
$37,000 ($740,000 x 5%) to Mrs. Elm's equipment.
Joint return after filing separate returns.
If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts.
The dollar limit (after reduction for any cost of section 179 property over $2,590,000).
The total cost of section 179 property you and your spouse elected to expense on your separate returns.
The facts are the same as in the previous example, except that Jack elected to deduct $300,000 of the cost of section 179 property on his separate return and his wife elected to deduct $20,000. After the due date of their returns, they file a joint return. Their dollar limit for the section 179 deduction is $320,000. This is the lesser of the following amounts.
$740,000—The dollar limit less the cost of section 179 property over $2,590,000.
$320,000—The total they elected to expense on their separate returns.
Business Income Limit
The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business.
Any cost not deductible in 1 year under section 179 because of this limit can be carried to the next year. Special rules apply to a deduction of qualified section 179 real property that is placed in service by you in tax years beginning before 2016 and disallowed because of the business income limit. See Special rules for qualified section 179 real property under Carryover of disallowed deduction , later.
In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. Net income or loss from a trade or business includes the following items.
Section 1231 gains (or losses).
Interest from working capital of your trade or business.
Wages, salaries, tips, or other pay earned as an employee.
In addition, figure taxable income without regard to any of the following.
The section 179 deduction.
The self-employment tax deduction.
Any net operating loss carryback or carryforward.
Any unreimbursed employee business expenses.
Two different taxable income limits.
In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. You may have to figure the limit for this other deduction taking into account the section 179 deduction. If so, complete the following steps.
|1||Figure taxable income without the section 179 deduction or the other deduction.|
|2||Figure a hypothetical section 179 deduction using the taxable income figured in Step 1.|
|3||Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1.|
|4||Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income.|
|5||Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1.|
|6||Figure your actual section 179 deduction using the taxable income figured in Step 5.|
|7||Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1.|
|8||Figure your actual other deduction using the taxable income figured in Step 7.|
On February 1, 2020, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $1,040,000. It elects to expense the entire $1,040,000 cost under section 179. In June, the corporation gave a charitable contribution of $10,000. A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $1,060,000. XYZ figures its section 179 deduction and its deduction for charitable contributions as follows.
Step 1–Taxable income figured without either deduction is $1,060,000.
Step 2–Using $1,060,000 as taxable income, XYZ's hypothetical section 179 deduction is $1,040,000.
Step 3–$20,000 ($1,060,000 − $1,040,000).
Step 4–Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000.
Step 5–$1,058,000 ($1,060,000 − $2,000).
Step 6–Using $1,058,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. Because the taxable income is at least $1,040,000, XYZ can take a $1,040,000 section 179 deduction.
Step 7–$20,000 ($1,060,000 − $1,040,000).
Step 8–Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000.
Carryover of disallowed deduction.
You can carry over for an unlimited number of years the cost of any qualified section 179 real property that you placed in service in tax years beginning after 2015, and that you elected to expense, but were unable to deduct because of the business income limitation. This disallowed deduction amount is shown on line 13 of Form 4562. You use the amount you carry over to determine your section 179 deduction in the next year. Enter that amount on line 10 of your Form 4562 for the next year.
If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. Your selections must be shown in your books and records. For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year.
If costs from more than 1 year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first.
Special rules for qualified section 179 real property.
You can carry over to 2021 a 2020 deduction attributable to qualified section 179 real property that you placed in service during the tax year and that you elected to expense but were unable to take because of the business income limitation. See Carryover of disallowed deduction , earlier. Thus, the amount of any 2020 disallowed section 179 expense deduction attributable to qualified section 179 real property will be reported on line 13 of Form 4562.
. If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. Instead, you must add it back to the property's basis. .
Partnerships and Partners
The section 179 deduction limits apply both to the partnership and to each partner. The partnership determines its section 179 deduction subject to the limits. It then allocates the deduction among its partners.
Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc.) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. To determine any reduction in the dollar limit for costs over $2,590,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. After the dollar limit (reduced for any nonpartnership section 179 costs over $2,590,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit.
Partnership's taxable income.
For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code.
Partner's share of partnership's taxable income.
For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business.
In 2020, Beech Partnership placed in service section 179 property with a total cost of $2,640,000. The partnership must reduce its dollar limit by $50,000 ($2,640,000 − $2,590,000). Its maximum section 179 deduction is $990,000 ($1,040,000 − $50,000), and it elects to expense that amount. The partnership's taxable income from the active conduct of all its trades or businesses for the year was $1,000,000, so it can deduct the full $990,000. It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners.
In addition to being a partner in Beech Partnership, Dean is also a partner in Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. He also conducts a business as a sole proprietor and, in 2020, placed in service in that business qualifying section 179 property costing $55,000. He had a net loss of $5,000 from that business for the year.
Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,590,000 and his dollar limit is not reduced. His maximum section 179 deduction is $1,040,000. He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership, minus $5,000 loss from his sole proprietorship). He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2021. He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records.
Different tax years.
For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year.
John and James Oak are equal partners in Oak Partnership. Oak Partnership uses a tax year ending January 31. John and James both use a tax year ending December 31. For its tax year ending January 31, 2020, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2019. John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2020 tax year.
Adjustment of partner's basis in partnership.
A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership.
Adjustment of partnership's basis in section 179 property.
The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits.
Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. The deduction limits apply to an S corporation and to each shareholder. The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits.
Figuring taxable income for an S corporation.
To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year.
To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income.
A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes.
It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return).
It is adjusted for items of income or deduction included in the amount figured in (1) not derived from a trade or business actively conducted by the corporation during the tax year.
How Do You Elect the Deduction?
You elect to take the section 179 deduction by completing Part I of Form 4562.
. If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. .
For property placed in service in 2020, file Form 4562 with either of the following.
Your original 2020 tax return, whether or not you file it timely.
An amended return for 2020 filed within the time prescribed by law. An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. The amended return must also include any resulting adjustments to taxable income.
. You must keep records that show the specific identification of each piece of qualifying section 179 property. These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. .
Election for qualified section 179 real property.
You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2020. For more information, see Election above. Also, see Revenue Procedure 2019-8 on page 347 of Internal Revenue Bulletin 2019-3, available at IRS.gov/irb/2019-03_IRB#RP-2019-08.
Revoking an election.
An election (or any specification made in the election) to take a section 179 deduction for 2020 can be revoked without IRS approval by filing an amended return. The amended return must be filed within the time prescribed by law. The amended return must also include any resulting adjustments to taxable income. Once made, the revocation is irrevocable.
When Must You Recapture the Deduction?
You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. You also increase the basis of the property by the recapture amount. Recovery periods for property are discussed under Which Recovery Period Applies? in chapter 4.
. If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Instead, use the rules for recapturing depreciation explained in chapter 3 of Pub. 544 under Section 1245 Property. For qualified real property, see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. You can find Notice 2013-59 at IRS.gov/irb/2013-40_IRB/ar14.html. .
. If the property is listed property (described in chapter 5), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. .
Figuring the recapture amount.
To figure the amount to recapture, take the following steps.
Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Begin with the year you placed the property in service and include the year of recapture.
Subtract the depreciation figured in (1) from the section 179 deduction you claimed. The result is the amount you must recapture.
In January 2018, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. The property is not listed property. The property is 3-year property. He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. He used the property only for business in 2018 and 2019. In 2020, he used the property 40% for business and 60% for personal use. He figures his recapture amount as follows.
|Section 179 deduction claimed (2018)||$5,000.00|
|Minus: Allowable depreciation using Table A-1 |
(instead of section 179 deduction):
|2020 ($740.50 × 40% (business))||296.20||4,185.20|
|2020 — Recapture amount||$ 814.80|
Paul must include $814.80 in income for 2020.
. If any qualified zone property placed in service during a particular year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. .
Congress authorizes privateers to attack British vessels
Because it lacked sufficient funds to build a strong navy, the Continental Congress gives privateers permission to attack any and all British ships on April 3, 1776.
In a bill signed by John Hancock, its president, and dated April 3, 1776, the Continental Congress issued "INSTRUCTIONS to the COMMANDERS of Private Ships or vessels of War, which shall have Commissions of Letters of Marque and Reprisal, authorizing them to make Captures of British Vessels and Cargoes."
Letters of Marque and Reprisal were the official documents by which 18th-century governments commissioned private commercial ships, known as privateers, to act on their behalf, attacking ships carrying the flags of enemy nations. Any goods captured by the privateer were divided between the ship’s owner and the government that had issued the letter.
Congress informed American privateers on this day that "YOU may, by Force of Arms, attack, subdue, and take all Ships and other Vessels belonging to the Inhabitants of Great Britain, on the high seas, or between high-water and low-water Marks, except Ships and Vessels bringing Persons who intend to settle and reside in the United Colonies, or bringing Arms, Ammunition or Warlike Stores to the said Colonies, for the Use of such Inhabitants thereof as are Friends to the American Cause, which you shall suffer to pass unmolested, the Commanders thereof permitting a peaceable Search, and giving satisfactory Information of the Contents of the Ladings, and Destinations of the Voyages."
[ @database = ] database' Is the name of the distribution database to be created. database is sysname, with no default. If the specified database already exists and is not already marked as a distribution database, then the objects needed to enable distribution are installed and the database is marked as a distribution database. If the specified database is already enabled as a distribution database, an error is returned.
[ @data_folder = ] 'data_folder'_ Is the name of the directory used to store the distribution database data file. data_folder is nvarchar(255), with a default of NULL. If NULL, the data directory for that instance of Microsoft SQL Server is used, for example, C:Program FilesMicrosoft SQL ServerMSSQL13.MSSQLSERVERMSSQLData .
[ @data_file = ] 'data_file' Is the name of the database file. data_file is nvarchar(255), with a default of database. If NULL, the stored procedure constructs a file name using the database name.
[ @data_file_size = ] data_file_size Is the initial data file size in megabytes (MB). data_file_size is int, with a default of 5MB.
[ @log_folder = ] 'log_folder' Is the name of the directory for the database log file. log_folder is nvarchar(255), with a default of NULL. If NULL, the data directory for that instance of SQL Server is used (for example, C:Program FilesMicrosoft SQL ServerMSSQL13.MSSQLSERVERMSSQLData ).
[ @log_file = ] 'log_file' Is the name of the log file. log_file is nvarchar(255), with a default of NULL. If NULL, the stored procedure constructs a file name using the database name.
[ @log_file_size = ] log_file_size Is the initial log file size in megabytes (MB). log_file_size is int, with a default of 0 MB, which means the file size is created using the smallest log file size allowed by SQL Server.
[ @min_distretention = ] min_distretention Is the minimum retention period, in hours, before transactions are deleted from the distribution database. min_distretention is int, with a default of 0 hours.
[ @max_distretention = ] max_distretention Is the maximum retention period, in hours, before transactions are deleted. max_distretention is int, with a default of 72 hours. Subscriptions that have not received replicated commands that are older than the maximum distribution retention period are marked as inactive and need to be reinitialized. RAISERROR 21011 is issued for each inactive subscription. A value of 0 means that replicated transactions are not stored in the distribution database.
[ @history_retention = ] history_retention Is the number of hours to retain history. history_retention is int, with a default of 48 hours.
[ @security_mode = ] security_mode Is the security mode to use when connecting to the Distributor. security_mode is int, with a default of 1. 0 specifies SQL Server Authentication 1 specifies Windows Integrated Authentication.
[ @login = ] 'login' Is the login name used when connecting to the Distributor to create the distribution database. This is required if security_mode is set to 0. login is sysname, with a default of NULL.
[ @password = ] 'password' Is the password used when connecting to the Distributor. This is required if security_mode is set to 0. password is sysname, with a default of NULL.
[ @createmode = ] createmode createmode is int, with a default of 1, and can be one of the following values.
|0||Identified for informational purposes only. Not supported. Future compatibility is not guaranteed.|
|1 (default)||CREATE DATABASE or use existing database and then apply instdist.sql file to create replication objects in the distribution database.|
|2||Identified for informational purposes only. Not supported. Future compatibility is not guaranteed.|
Identified for informational purposes only. Not supported. Future compatibility is not guaranteed.
[ @deletebatchsize_xact = ] deletebatchsize_xact Specifies the batch size to be used during cleanup of expired transactions from the MSRepl_Transactions tables. deletebatchsize_xact is int, with a default of 5000. This parameter was first introduced in SQL Server 2017, followed by releases in SQL Server 2012 SP4 and SQL Server 2016 SP2.
[ @deletebatchsize_cmd = ] deletebatchsize_cmd Specifies the batch size to be used during cleanup of expired commands from the MSRepl_Commands tables. deletebatchsize_cmd is int, with a default of 2000. This parameter was first introduced in SQL Server 2017, followed by releases in SQL Server 2012 SP4 and SQL Server 2016 SP2.
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Major Thomas Jones…Welsh Privateer Namesake of Jones Beach State Park, New York
Thomas Jones, who fought at the Battle of the Boyne, Aghrim, and at the capitulation of Limerick, served under William III of England and under James II of Ireland, having served as a Major in the army of the dethroned Monarch. The family of Major Thomas Jones, which had formerly been from England, but of Welsh extraction, had long been seated in the north of Ireland.
Major Jones was born about 1665. In 1692, Major Jones was at the island of Jamaica at the time of the great earthquake of July 7th, being engaged in one of the numerous expeditions under the “Letter of Marque”, and which so many of the English and Irish officers of James II sought service after the defeat at the Battle of the Boyne. In that same year Major Jones arrived in Warwick, Rhode Island and at this place met and married Freelove Townsend, the daughter of Thomas Townsend. Freelove was born Dec. 29, 1674. Thomas Townsend was the son of John Townsend, a prominent Quaker, who came to New Amsterdam early in the 17th century about 1635, from Norwich, England. The family were of great antiquity, their lands being granted them from William the Conqueror.
Thomas Townsend, the father of Freelove Townsend, gave to Thomas Jones and his bride a large tract of Land which had formerly belonged to the Massapequa Indians, on the south side of Long Island. To this vast estate Major Jones and his wife removed in 1696, where he built a substantial brick house at the head of the creek. In 1702, Lord Cornbury, Governor of New York, commissioned Major Jones Captain of the Militia in Queens County, New York on Oct. 20 in that same year on Oct 14, 1704, he was appointed High Sheriff of Queens, and on April 3, 1706 he was appointed Major of the Queens County Regiment.
Governor Hunter, of the Province of New York appointed him Ranger General of the Island of Nassau (Long Island), which gave to him the monopoly of the whale and other fisheries from the north to the south shore of the island. This commission was dated Sept. 4, 1710.
Major Jones died Dec. 13, 1713, and was buried in a a small grave yard on the banks of the then called Brick House Creek, now called Massapequa Creek. The issue of Major Thomas Jones and Freelove was 7 children. A brown headstone marked the spot on which the following inscription written by himself, “Here Lyes Interd The Body of Major Thomas Jones, Who Came From Straubane, In The Kingdom of Ireland, Settled Here and Died December, 1713”.
From Distant Lands to This Wild Waste He Came,
This Seat He Choose, And Here He Fixed His Name,
Long May His Sons This Peace Full Spot Injoy,
And No Ill Fate his Offspring Here Annoy.
For many years after his death many fictions existed about Thomas Jones. The exercise of his commission to sail as a Privateer under “Letters of Marque”, from the French ports, leading to the slander that he was a pirate. These myths were cherished for over a century after his death through ignorance and superstition, and through ignorance and superstition that these fables extended into the middle of the past century and today…
In 1929, the large tract of land given to Thomas Jones and his wife Freelove, along with subsequent purchases by Major Jones, officially became Jones Beach State Park, as part of the New York State Park System through the dedication from Governor Franklin D. Roosevelt, and the nautical vision of Robert Moses.
Watch the video: Privateer Trawler 65 2014 Demo (June 2022).