Section 179 Deduction: Tax Benefits and Capital Equipment Purchase

Section179.org   Section 179 Deduction

It’s still worth checking out Section179.org to review the opportunities available in Section 179 Deduction and Bonus Depreciation that can be used in 2011.

Here are some of the Frequently Asked Questions with reference to Section179 Deduction and Bonus Depreciation

FAQs – Section 179 Deduction & Bonus Depreciation

What is the Section 179 Deduction?

Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of financed or leased equipment and off-the-shelf software that qualifies for the deduction. The equipment purchased or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken (for tax year 2011, this means the equipment must be put into service between 01/01/2011 and 12/31/2011).

Did the Stimulus Acts have an impact Section 179?

The ‘Economic Stimulus Act of 2008’ generously increased the limits of the Section 179 Deduction and also added a one-time “Bonus Depreciation” on equipment that exceeded the deduction limit. Since then, four more stimulus acts have extended and enhanced these tax incentives.

What’s the difference between Section 179 and Bonus Depreciation?

The most important difference is both new and used equipment qualify for Section 179 Deduction, while Bonus Depreciation covers new equipment only. Bonus Depreciation is useful to very large businesses spending more than $2 million on new capital equipment in 2011; also businesses with a net loss in 2011 qualify to carry-forward the Bonus Depreciation to a future year. When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business has no taxable profit in 2011.

To read more Question and Answers on Section 179.org go to the official government website  Section179.org

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