Tax Code 179 Benefits of
a Straight Machine Tool Purchase or Lease with $1.00 Purchase Option
Take advantage of Tax
Code Section 179 and expense up to the amount allowed for the year the
equipment is installed. You may depreciate any excess on the
depreciation schedule for that particular asset.
1.
Under Section 179 the limit on expense deductions
for capital investments has been raised from $128,000 to $250,000.00.
2.
Also, a first year bonus depreciation of 50% of the investment value is
included.
Tax Code Section 179 & Election to Expense
An expense deduction is provided for taxpayers (other than estates,
trusts or certain non-corporate lessors) who elect to treat the cost of
qualifying property, called Section 179 property, as an expense rather
than a capital expenditure. Under Section 179, equipment purchases, up
to the amount approved for a given year, can be expensed (deducted from
taxable income) if installed by December 31st.
Non-Tax leases qualify for this deduction in their year of inception.
Any excess above the expensed amount can be depreciated depending on the
equipment type.
The election, which is made on Form 4562, is for the tax year the
property was placed in service or an amended return filed within the
time prescribed by law. The total cost of property that may be expensed
for any tax year cannot exceed the total amount of taxable income during
the tax year. Section 179 property is property that you acquire by
purchase for use in the active conduct of your business. To ensure
property qualifies, reference publication 946. The 179 deduction figure
is increased for an enterprise zone, renewal community, and the Liberty
Zone.
Further Detail
For further detail, contact your tax advisor or visit
http://www.irs.gov and reference Form
4562.