Section 179 - tax depreciation rules for

"Depreciation". For business owners, this word is the most likely to inspire headaches and fits of cussing one. The extended provisions of section 179 are only the drug is needed to cure the depreciation blues.

Depreciation

Traditionally, if your business property has had a lifetime of more than one year, the cost must be deducted in tax years. The number of years depended on the characteristics of the property, which made depreciation the flag-bearing example of the complexity of the tax code. Incredibly, the federal government has provided substantial relief to entrepreneurs.

Section 179 of the Internal Revenue Code has been significantly expanded to the benefit of businesses, especially small ones. This code allows companies to fully deduct the cost of tangible property the year of purchase. Tax relief comes from the expansion of the total amount that may be deducted in a year.

Deduction huge increase

As part of the job growth and Reconciliation Act of 2003, a year deduction amount was increased from $ 25,000 to $ 100,000. The 100,000 figure will be adjusted for inflation each year, which means that it will continue to increase. This is very good news.

What property qualifies?

You can deduct the cost of the following properties under Section 179:

1. Machinery and equipment

2. Furniture and furnishings

3. Computer software.

You must elect Section 179. It is not automatically given to you. Just fill out IRS Form 4562 and attach to the statements for the company.

In Closing

As shocking as this sounds, the government should be applauded for expanding Section 179. Small businesses are burdened by too many rules and mandatory costs. The expansion of section 179 is a nice piece of tax relief legislation. We hope that more is on the road .......