SECTION 4. APPLICATION OF

§ 179(b)(1) STIMULUS ACT LIMITATION WHEN TAXABLE YEARS OF PASSTHROUGH ENTITY AND ITS PARTNERS OR SHAREHOLDERS DO NOT COINCIDE

.01 In General . For any taxable year beginning in 2008, the § 179(b)(1) limitation under the Stimulus Act is $250,000. For taxable years beginning in 2009, the § 179(b)(1) limitation will be $125,000 plus an additional amount determined in accordance with the inflation adjustment provision of § 179(b)(5) (2009 § 179(b)(1) dollar limitation).

.02 Application of § 179(b)(1) Limi- tation in Taxable Years 2008 and 2009 to Passthrough Entity and Its Partners or Shareholders with Different Taxable Years .

(1) Partnership or S corporation . A partnership or an S corporation (passthrough entity) with a taxable year beginning in 2007 and ending in 2008 is subject to the § 179(b)(1) limitation of $125,000 for § 179 property placed in service by the passthrough entity during that taxable year. A passthrough entity with a taxable year beginning in 2008 and ending in 2009 is subject to the § 179(b)(1) limitation under the Stimulus Act of $250,000 for § 179 property placed in service by the passthrough entity during that taxable year.

(2) Partner or S corporation share- holder . Pursuant to § 1.179–2(b)(3)(iv), a partner or a S corporation shareholder that is a calendar-year taxpayer is subject to the § 179(b)(1) limitation under the

2008–38 I.R.B. 723 September 22, 2008

GO Zone extension property), the rules under § 168(k) apply to such property.

.02 Stimulus Act and Kansas Disaster Area .

(1) Section 179 property . (a) In general . Sections 15345(a)(2) and (d)(2) of the Farm Bill increased the dollar amounts under § 179(b)(1) and (b)(2) that are available to taxpayers for qualified § 179 Recovery Assistance property (§ 179 RA property) placed in service by the taxpayer on or before December 31, 2008. Section 179 RA property is § 179 property (as defined in § 179(d) and § 1.179–4(a)) that is qualified Recovery Assistance property (as defined in § 1400N(d)(2) and in sections 2.02 and 2.03 of Notice 2008–67, 2008–32 I.R.B. 307 (August 11, 2008)). See § 1400N(e)(2)(A). Section 15345(d)(2) provides that, with the exception of newly revised dates for determining the eligibility of § 179 RA property, the rules for determining the eligibility of the increased dollar amounts under § 179(b)(1) and (b)(2) that are available to taxpayers for § 179 RA property will be determined by following § 1400N(e) (other than § 1400N(e)(2)(B)). Accordingly, for purposes of § 179, the dollar amount in effect under § 179(b)(1) for the taxable year is increased by the lesser of $100,000, or the cost of § 179 RA property placed in service during the taxable year, and the dollar amount in effect under § 179(b)(2) for the taxable year is increased by the lesser of $600,000, or the cost of § 179 RA property placed in service during the taxable year.

(b) Section 179 RA property placed in service during any taxable year begin- ning in 2008 . For all § 179 RA property placed in service by a taxpayer during any taxable year beginning in 2008, the § 179(b)(1) dollar amount is $250,000, increased by the lesser of $100,000, or the cost of that property placed in service during that taxable year, and the § 179(b)(2) dollar amount is $800,000, increased by the lesser of $600,000, or the cost of that property placed in service during that taxable year. Accordingly, for all § 179 RA property described in this section 6.01(2)(b), the maximum § 179(b)(1) and § 179(b)(2) amounts available for any taxable year beginning in 2008 are $350,000 and $1,400,000, respectively.

least the lesser of 10 percent of the cost of the aircraft or $100,000.