In Blog, Taxes for Businesses

Are you saving your small business all the money you possibly can? Tax code section 179 is a popular one for business owners for their money-saving strategy during their tax season.

Section 179 Deduction

This section applies to companies that have property they want to depreciate. Under normal circumstances, a company would depreciate a piece of equipment or asset over its “lifetime”, which can reach up to 39 years. Under section 179 however, a business can decide to take that depreciation much quicker, in fact all in one year.

This strategy can be handy for new businesses that are investing in a lot of things in a short period of time, or for growing businesses ready to take the next step up.

The 179 deduction is often the cost of the qualified property. Generally, per year this is limited to $500K.

Qualifying Assets

There are a few particulars that must be met for a property to qualify for this deduction. It must be:

  • Tangible personal property
  • Used for particular things
    • eg. part of manufacturing, production, communications, utilities, etc.
    • Research facility
    • Facility for bulk storage of fungible commodities associated with activities listed above
  • Livestock/horticulture structures
  • Storage in connection with petroleum
  • Off-the-shelf computer software

Non-Qualifying Assets

  • Land and land improvements (eg. swimming pools, fences, docks)
  • Property leased to another person unless it meets certain criteria.
  • Property used for lodging unless, again, it meets certain criteria.

Other Things That Are a “No”

  • Cannot be used on property that you might inherit, or buy from a relative
  • Cannot convert personal property to business property and use this deduction – it must be primarily used for business in the year you purchase it.

Read on for all the necessary details provided by the IRS

If you’re looking for financial statement preparation, some tax management in Menomonee Falls, WI, or just want some quality accountant services wherever you or your business is located, please contact D&M Accounting and we will be happy to help out!

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