Taking advantage of Section 179 before it's too late
October 13, 2011
There is still time for businesses to take advantage of Section 179 of the Internal Revenue Service's tax code. Until the end of the 2011 tax year, businesses can deduct the full purchase price of up to $500,000 of fixed assets
and other depreciable items purchased this year.
The incentive was introduced by the government to "encourage businesses to buy equipment and invest in themselves," according to the Section 179 website. After the deadline, the expense deduction limit falls significantly to $125,000, and the beginning-of-phase-out amount drops to $500,000. For tax years beginning after 2012, the maximum Section 179 deduction and beginning-of-phase-out amount fall further, to $25,000 and $200,000, respectively.
"These changes mean that businesses that have modest machinery and equipment needs should look to maximizing expensing for 2011," said Lesli S. Laffie, a senior tax analyst for Thomson Reuters. "(There is) a powerful incentive to invest by the end of 2011, to be able to claim the maximum expense deduction."
A total of 100 percent bonus depreciation
for new equipment can be taken after the $500,000 deduction limit is reached.