Explaining accelerated depreciation
November 07, 2011
The accelerated depreciation
provisions of Section 179 of the Internal Revenue Code allow companies to write off the purchase of eligible fixed assets
as an expense, saving them from having to set up depreciation schedules
to write off the cost over a number of years.
The expense deduction must be $500,000 or less and can be applied to equipment that's new or used, provided it is new to the business. Purchases in excess of $500,000 may be eligible for bonus depreciation, but the equipment must be new and normally depreciated over 20 years or less.
The Press-Enterprise recently broke down the fixed asset
categories that are eligible. These include machinery and other equipment, business vehicles built on truck chassis that weigh more than 6,000 pounds, computers and software, office furniture and "tangible personal property" that's housed or attached to a building.
The Houston Chronicle recently warned small business owners not to invest in fixed assets unless they are needed and can be installed by December 31, which is when the tax break expires.