Here's the good news: the numbers can get ever better… But you must act by 12/31/2014.
Section 179 got a nice boost with the "Tax Extenders Bill" just passed at the last minute by Congress in December 2014. But to take advantage of the current deduction and any retroactive raise, you must buy the equipment (and place it into service) by 12/31/2014. Use Form 4562 to claim your deduction.
Section 179 Tax Deduction Limits for year 2014:
The Section 179 Deduction is currently $500,000 for 2014. This means businesses can deduct the full cost of equipment from their 2014 taxes, up to $500,000. Plus, the 50% bonus depreciation has returned as well, making Section 179 a fantastic deal for 2014.
Small and Medium Businesses Benefit the Most
Section 179 is a true small to medium business tax deduction. The deduction is unaffected until $2,000,000 in equipment purchases is reached (where it then decreases on a dollar for dollar basis.) This means, at current limits, if a business buys $2,500,000 worth of equipment, their Section 179 deduction is reduced to zero. But until that point? Enjoy.
| Section 179 Deduction Limits for 2014 |
|---|
| Deduction Limit | $500,000 |
| Limit on Capital Purchases | $2,000,000 |
| Bonus Depreciation | 50% |
About the limits
Most small and medium businesses will greatly benefit by taking the Section 179 deduction. But to take advantage of it, the equipment must be purchased and put into service by 11:59pm, 12/31/2014 (in other words, when the New Year starts, Section 179 for 2014 is over.)
A Look Towards 2015
For 2015, Section 179 is scheduled to return to the old $25,000 limit.
Qualifying Property for Section 179:
- Business equipment of all types including machinery, computers, office furniture, storage tanks, signage, and any other commercial equipment.
- Vehicles designed for commercial-use such as 9+ passenger seats, cargo area of at least 6', or fully enclosed driving compartment with no body section protruding more than 30" ahead of the windshield.
- Vehicles with 6,000+ pounds GVW (gross vehicle weight) qualify for Section 179 but are limited to a $25,000 deduction… basically certain heavy SUVs.
- Off-the-shelf software readily available for purchase by the general public with a non-exclusive license and not substantially modified… note, websites do not qualify.
- Storage facilities and/or structures utilized for agricultural / horticultural purposes (Small disclaimer: main buildings / plants / offices don't qualify. Think movable structures, grain silos, and the like.)
The equipment listed above need not be new – it can be used (but new to you). Almost any "portable" (non-permanently installed) piece of business equipment will likely qualify. If you have any questions on whether something you wish to lease or finance will qualify for Section 179, you can always ask us, or reference IRS Publication 946.
Tax Code Section 179 limits have been modified by various Stimulus Acts over recent years. For further detail, contact your tax adviser or visit www.irs.gov and reference Form 4562.
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