Section 179 Deductions

Section 179 Deductions

With the Section 179 Deductions property for business has a useful life of more than one year, the cost must be spread across several tax years as depreciation with a portion of the cost deducted each year.

But there is a way to immediately receive these income tax benefits in one tax year. The provisions of Internal Revenue Code Section 179 allow a business, sole proprietor, partnership or corporation to fully expense tangible property in the year it is purchased.

Tax law changes have made this option much more appealing by dramatically increasing the amount that can be written off immediately. The inflation-adjusted amount for 2004 taxes is $102,000.

Eligible property that may be written off in the tax year of purchase, rather than depreciated over the asset's life, includes:

  • Machinery and equipment

  • Furniture and fixtures

  • Storage facilities

  • Single purpose agricultural or horticultural structures

Also, the definition of eligible section 179 property was expanded by the 2003 legislative changes to include off-the-shelf computer software. Previously, it had to be written off over three years.

Ineligible property includes:

  • Buildings and their structural components

  • Income producing property (investment or rental property)

  • Property held by an estate or trust

  • Property acquired by gift or inheritance

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