IRS Section 179

Under IRS Section 179, equipment purchases, up to $108,000, can be expensed (deducted from taxable income) if installed by December 31st. Finance leases ($1.00 buyout) qualify for this deduction in their year of inception. The 2003 law quadrupled the amount of qualified property that can be expensed under IRS Section 179 from $24,000 to over $100,000! Qualifying property now also includes off-the-shelf computer software.

The total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income (determined after application of the investment limitation) derived from the active conduct of any trade or business during the tax year. Costs disallowed under this rule may be carried forward an unlimited number of years subject to the ceiling amount for each year.

 

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