The Section 179 deduction was extended by the American
Taxpayer Relief Act of 2012 (ATRA) and increased to $500,000 for 2013. Without further legislation, the maximum
deduction is scheduled to drop to $25,000 for 2014.
Tax Tip: Consider borrowing money if you are planning
on purchasing large equipment in the next year or so. The tax law allows you to write off the full
amount of the purchase in 2013, even if you financed the purchase.
Be sure you keep the Section 179 limits in mind:
- The
Section 179 deduction can’t exceed your taxable income from the business before
the deduction, and - It
phases out dollar-for-dollar for any amount of an equipment purchase that is
over $2 million. In 2014 the phase-out
threshold is reduced to $200,000.
As usual, it is important to meet with your tax advisor to
calculate your savings and make sure you meet all the requirements.