According to the Tax Court, an asset must be ready for business use by year-end to qualify for expensing. In the court case the owner of an S corporation put the cart before the horse, buying a plane for her cargo delivery business without having anyone who could fly it. Her husband took flying lessons in the plane, but never progressed beyond the student pilot level. The aircraft was never used for business that year. The S firm expensed the cost of the plane, but the Court said the plane wasn’t ready for use that year because it lacked a qualified pilot. It must have been a hell of a deal to pay for a plane and have it sitting and depreciating.
This is not the type of tax planning that I would recommend for any client.
Douglas, TC Memo. 2011-214