IRS Code Section 179 | What is it - in Simple Terms?
This time of year, I am inundated with emails from lenders proclaiming, “Make sure your clients are taking advantage of Section 179!” In short, Section 179 allows a business deduction in the year that you put a piece of equipment in use. Although I have spoken of Section 179 in the past, I have put together a short bullet presentation for easy reading and understanding.
- Section 179 is designed to make purchasing/leasing that equipment during this calendar year financially attractive.
- Almost all types of “business equipment” that your company buys or finances will qualify for the Section 179 deduction. This includes office furniture and some personal vehicles.
- Lease payments are deductible in addition to the depreciation.
- Section 179 began in 2008 to help stimulate the economy. The deduction has caught on and in 2015 became permanent under the IRS PATH Act passed by congress.
- Section 179 allows you to depreciate 100% of the equipment purchased in the current calendar year.
- The equipment you purchase must be funded and equipment put into use the year that you are claiming the depreciation.
- The maximum amount allowed to depreciate is $1,050,000.
- New or used equipment both qualify; needs to be new to you.
- Personal autos qualify if used 50% or more for business and weigh at least 6000 lbs. but for a maximum deduction of $11,160.
- Title for personal autos must be in the name of the business.
- Section 179 can be used every year.
- Deduction qualifies whether you buy outright, lease or finance.
- You cannot buy outright using a gift or inheritance.
- Equipment cannot be used outside of the United States.
As with any deduction or tax strategy, it is always a good idea to consult with your tax preparer or CPA. I hope the above has been helpful. Please do not hesitate to call or write me if you have any additional questions.
I am hoping for your business to finish 2021 strong!
"A certain amount of opposition is a great help to a man. Kites rise against, not with, the wind."
Did You Know???
Facts About Avocados
- Most avocados come from Mexico. While avocados are grown in California and Florida, the majority sold in grocery stores come from south central Mexico. The main reason for the abundance of “south of the border” avocados is that Mexico is blessed with a year-round growing climate.
- “Avocado” wasn’t its original name. Irishman Sir Hans Sloane called it an avocado in 1696 in a Jamaican-plants catalog. He also dubbed the avocado tree the “alligator pear tree."
- It’s actually a fruit. Did you know that an avocado is a fruit? While definitely not sweet, it falls firmly in the fruit-not the vegetable-family.
- It’s relatively new to the United States. It wasn’t until the 1950s when Americans turned to avocados. This makes it a relatively new food in our country.
Just for Laughs!
A young boy enters a barber shop and the barber whispers to his customer, "This is the dumbest kid in the world. Watch while I prove it to you."
The barber puts a dollar bill in one hand and two quarters in the other, then calls the boy over and asks, "Which do you want, son?" The boy takes the quarters and leaves.
"What did I tell you?" said the barber. "That kid never learns!"
Later, when the customer leaves, he sees the same young boy coming out of the ice cream parlor.
"Hey, son! May I ask you a question? Why did you take the quarters instead of the dollar bill?"
The boy licked his cone and replied:
"Because the day I take the dollar the game is over!"