Explaining Section 179
December 08, 2011
Section 179 allows businesses to deduct the full purchase price of qualifying new and used fixed assets
during the tax year in which they were bought.
Most equipment that's purchased or leased will qualify for the deduction. Section 179 is similar to 100 percent bonus depreciation
, but a key difference is that the latter only applies to new equipment.
The 2011 Section 179 deduction limit is $500,000 - double the previous figure - while the 2011 limit on equipment purchases is $2 million, up from $800,000. For bonus depreciation, 100 percent is taken after the $500,000 deduction limit is reached or a business exceeds $2 million in fixed asset
Property that qualifies for Section 179 includes machinery and other equipment purchased for business use, business vehicles that have a gross vehicle weight in excess of 6,000 lbs, office equipment, computers and computer software.
AgWeb notes that there is no set figure for how much of a Section 179 deduction must be taken. The remaining amount can be depreciated normally. To qualify, equipment must be purchased and put into service by December 31.