IRS Section 179 Deduction
- Section 179 is a tax code created to help businesses. By allowing businesses to deduct the full amount of the purchase price of equipment (up to certain limits), Section 179 is a fantastic incentive for businesses to purchase, finance or lease equipment this year.
- Section 179 is valid on most types of equipment. There is little sense in allowing a deduction on only obscure equipment, so Section 179 is aimed at general business equipment as well as off-the-shelf software. If you use it in your business, it probably qualifies.
- Section 179 can greatly help your bottom line. By deducting the full cost, you lower the amount you pay for equipment and/or software substantially. And these benefits can be further expanded if you choose to lease or finance your equipment & software.
- Section 179 is simple to use. All you need to do is buy (or lease) the equipment, and use a special IRS form. That’s it. Details here.
- Section 179 enhancements typically expire at year’s end. The various Stimulus Acts over the past few years have included special provisions for Section 179 and Bonus Depreciation, and greatly increased the limits on how much businesses could deduct. But the enhancements usually expire at the end of the year.
There is simply no better time than now to take advantage of Section 179 and Bonus Depreciation because it ends December 31st.
To see how this code applies to your business, be sure to consult your tax professional. If you’re looking for more information on this deduction, visit section179.org.
Deduct up to $25,000, plus normal 20% depreciation on any remaining balance, if any, all in the first year. 1,2
(Applies to Trucks and Vans over 6,000 lbs. GVWR)
Deduct up to $3,460 in the first-year. 2
(Applies to Trucks and Vans under 6,000 lbs. GVWR)
Deduct up to $3,160 in the first-year. 2
(Applies to passenger vehicles under 6,000 lbs. GVWR)
1. This analysis applies only to vehicles placed in service in the United States after December 31, 2016 and by December 31, 2017 with no written binding contract for acquisition in effect before January 1, 2017. The aggregate deduction of $25,000 under Internal Revenue Code Section 179 is most beneficial to small businesses that place in service less than $200,000 of “Section 179 property” during the year (vehicles and other business property). 2. IRC Section 280F(d)(7(B) requires that the limitation under IRC Section 280F(a)(1) be adjusted annually, based on the CPI automobile component for October of the preceding year. The IRS officially announced the Section 280F depreciation limits in Revenue Procedure 2015-2019. The passenger automobile limitation is $3,160, the trucks/vans under 6,000 lbs. limitation is $3,460. The expensing restrictions under Section 280F do not apply to vehicles that are considered to be “qualified nonpersonal use vehicles” (QNUVs). A QNUV is generally a vehicle that, by virtue of its nature or design, is not likely to be used more than a de minimis amount for personal purposes. For more information, see Income Tax Reg., Sec. 1.280F-6(c)(3)(iii), Income Tax Reg. Sec. 1.274-5T(k), and Revenue Ruling 86-97, and contact your tax advisor for details. Consult your tax advisor as to the proper tax treatment of all business-vehicle purchases.