Section 179 Deduction: What Does It Mean For Your Business?

What is it? Section 179 deduction allows business owners to expense a depreciation deduction in one year instead of taking it over the useful life of the asset.

What is allowable? Purchased long-term (new or used) tangible personal property for a business. This property must be used for the business more than 50% of the time in the year it is purchased. This does not apply to property that is inherited or purchased from a company you control.

General Examples of allowable:
• Computers
• Business Equipment
• Business Machinery
• Office Furniture
• Computer Software – “off the shelf”
General Examples of non-allowable
• Land
• Permanent Structures – Fencing, paved parking areas
• Intangible property – Patents, copyrights, trademarks
• Property used outside of the United States
• HVAC

General Limitations: The deduction limit is applied to all businesses you own combined. The deduction limit from 2010 to 2014 was increased to $500,000 to stimulate economic growth. Currently, there is active debate in the U.S. Legislature to reduce the deduction limit to $25,000 for 2015. This decision is scheduled to occur by the end of summer.

With constant change in the tax code, it is important to consult with an experienced and trusted CPA or tax professional.

by Wilke & Associates, LLP

image courtesy of mklop.com