What is the section 179 deduction?
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the US Government to encourage businesses to buy equipment and invest in themselves. It is sometimes referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to purchase qualifying vehicles (like SUV’s and Hummers.) Essentially, Section 179 works like this: When your business buys certain pieces of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a vehicle, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example.) Now, while it’s true that this is better than no write of
The Section 179 deduction refers to the portion of the US Tax Code dealing with deductions that businesses may choose to take advantage of for equipment purchases. To help encourage businesses to invest in themselves, this provision was created in the tax code. A Section 179 deduction can not only help businesses save a substantial amount of money that would otherwise be paid in taxes, it can provide a boost to the economy as well. The way that the deduction for a piece of business equipment has typically worked is that the business was able to deduct a little each year. That deduction was typically tied to the depreciation of the equipment. For example, if a machine was purchased for $100,000 US Dollars (USD) and was expected to last 10 years, the business may be able to deduct $10,000 USD each year for 10 years. While that tax deduction is valuable, businesses can use the Section 179 deduction to get that benefit much sooner. In fact, the Section 179 deduction allows businesses to de
Section 179 of the IRS Tax Code allows a small business to deduct, for the current tax year, the full purchase price of financed or leased equipment 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 2009, this means the equipment must be put into service between 01/01/2009 and 12/31/2009).
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year in which they put the purchased equipment in to use. This means when you buy (or lease) a piece of qualifying equipment, you can deduct the ENTIRE purchase price from your gross income.
