Section 179 of the IRS Code allows businesses to take a depreciation deduction for certain assets (capital expenditures) in one year, rather than depreciating them over a longer period of time. This income tax deduction is called a “Section 179 deduction.” This means most small businesses are running out of time for this deduction for the tax year 2018.
In an age when computer software can easily run hundreds and hundreds of dollars plus yearly updates, the special Section 179 deduction can be a life saver. There are many other ways to use this deduction. What qualifies as section 179 property?
- Material goods that generally qualify for the Section 179 Deduction
- Equipment (machines, etc.) . . .
- Tangible personal property used in business.
- Business Vehicles with a gross vehicle weight in excess of 6,000 lbs (see Section 179 Vehicle Deductions)
- Computer “Off-the-Shelf” Software.
- Office Furniture.
Temporary 100 percent expensing for certain business assets (first-year bonus depreciation): The new law increases the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. The bonus depreciation percentage for qualified property that a taxpayer acquired before Sept. 28, 2017, and placed in service before Jan. 1, 2018, remains at 50 percent. Special rules apply for longer production period property and certain aircraft.
The definition of property eligible for 100 percent bonus depreciation was expanded to include used qualified property acquired and placed in service after Sept. 27, 2017, if all the following factors apply:
- The taxpayer or its predecessor didn’t use the property at any time before acquiring it.
- The taxpayer didn’t acquire the property from a related party.
- The taxpayer didn’t acquire the property from a component member of a controlled group of corporations.
- The taxpayer’s basis of the used property is not figured in whole or in part by reference to the adjusted basis of the property in the hands of the seller or transferor.
- The taxpayer’s basis of the used property is not figured under the provision for deciding basis of property acquired from a decedent.
- Also, the cost of the used property eligible for bonus depreciation doesn’t include the basis of property determined by reference to the basis of other property held at any time by the taxpayer (for example, in a like-kind exchange or involuntary conversion).
To get even more tax and money savings, you should contact your nearest CPA or business accounting expert . . . You can find suggestions on the website of Nth Degree CPAs: “We work with you throughout the year to make sure you’re paying the least amount of taxes legally required.” – nthdegreecpas.com/
Section 179 deduction is a great tool for business . . . check it out.