Can my business deduct equipment delivered in December but installed in January?
A paid invoice and a delivery receipt do not establish when equipment became ready and available for business use.
The date that controls
A profitable manufacturer orders a new production line in November. It arrives on December 27, but an electrician connects it and the vendor completes commissioning in January. The owner wants a December deduction because the purchase was paid for. For depreciation, the controlling date is when property is placed in service: ready and available for its specific business use. On these facts, delivery alone is weak evidence of a December placed-in-service date.
The answer can differ for a machine that is fully installed, tested, and available to produce goods in December even if the owner first runs a customer order in January. Preserve the facts that show readiness, rather than selecting the date from a bill or payment confirmation.
Build a date file for each major asset
Keep the purchase contract, freight receipt, installation work orders, utility sign-off, vendor acceptance test, insurance start date, and first production log. Separate a complete machine from optional later upgrades. An unfinished installation and a usable machine awaiting routine production have different facts.
Financing does not by itself change the readiness test. Nor does a year-end journal entry make equipment available for use. Section 179 and any applicable bonus depreciation should be modeled only after the asset's qualifying cost, business use, and placed-in-service year are established. Limits and elections can change the best choice.
Plan the return and next purchase
Give AE an asset-by-asset schedule with dates and supporting records before the return is signed. We can align the tax depreciation schedule to operations records and compare available elections with expected income. For next year's capital purchases, involve facilities and the vendor early enough to know whether installation can actually finish before year-end.
Primary tax sources
Related AE Tax guidance
Review Your Facts With AE
Bring the transaction documents and dates to a discovery call. We can identify the tax questions, records, and next steps for your business or property.