In case you’re a new business owner, you may not be familiar with Section 179 and its benefits. Section 179 allows business owners to fully deduct certain equipment purchases in the year they were purchased rather than depreciating the expenses over several years! To qualify, property must be used more than 50% in a trade or business and be acquired from an unrelated party.
The maximum Section 179 deduction for tax years beginning 2010 was virtually cut in half compared to last year, but Congress has now retroactively extended the same generous rules that applied for tax years beginning in 2009.
So, ramp up your equipment purchases! Under the HIRE Act, you can write off up to $250,000 of qualified business assets placed in service in tax years beginning in 2010 (same as last year). Without this law change, the maximum deduction would have been only $134,000. The maximum deduction phases out on a dollar-for-dollar basis for purchases exceeding a specified threshold. The new law preserves the $800,000 threshold for tax years beginning in 2010 (same as last year). Without this change, the threshold would have dropped to only $530,000.
Tip: The HIRE Act doesn’t extend first-year “bonus depreciation.”
If you have any questions, feel free to call our office at 915-857-8158.
Courtesy of www.SmallBizTax.net and 1040 Quickfinder Handbook