Business owners will want to take note that the increased section 179 expense deduction limit of $500,000 expires by the end of 2011. You may want to chat with your CPA and act before the year ends.
That’s because if you own a profitable business, and you plan to purchase equipment, property or vehicles for the business, you may be able to claim a Section 179 deduction and decrease your tax liability, so long as you have placed the qualifying asset in service this year.
Form 4562 from the IRS says:
- The maximum section 179 expense deduction currently is $500,000 ($535,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2 million.
- For tax years beginning after 2011, the increased section 179 expense deduction limit of $500,000 and threshold amount before reduction in limitation will no longer apply.
- The 100% special depreciation allowance will not apply to most property placed in service after December 31, 2011.
- For tax years beginning after 2011, the definition of section 179 property will no longer include certain qualified real property.
More information, including any future developments affecting Form 4562, such as possible new legislation, will be posted at irs.gov/form4562. Please contact your CPA or tax specialist for assistance, since neither Bonnett Wealth Management nor Securities America provides tax advice.
