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Depreciation deductions stuck in gear

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. Our company bought a new machine on Dec. 28. But due to technical problems, we could not start using it until Jan. 4. Can we deduct the cost in 2011? J.F., Muncie, Ind.

A. No. Technically, you can begin to depreciate the cost of property in the year in which it is “placed in service” for business purposes. The IRS defines this as being ready and available for a specific use. Therefore, if the machine wasn’t in operating condition, you can’t claim either depreciation deductions or the Section 179 deduction for it in 2011.

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