Section 179 of the tax code allows
businesses to deduct the entire cost of certain
types of property on their income taxes as an
expense in the year acquired rather than
capitalizing and depreciating it over time.
This
property, other than real estate, is generally
limited to personal property that is used in business
and trade.
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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.
This incentive was
created by the US Government to encourage
businesses to buy or lease equipment and
invest the money into their businesses.
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In 2010,
under Section 179 of the IRS Code business may expense
the first $134,000 of equipment leased or purchased,
provided that it is eligible equipment and placed in
service by 12/31/10.
This allows businesses to reduce
their current year’s tax liability, which is a great
incentive for small to medium businesses to buy new
equipment or software. Both leased and purchased
equipment is eligible for this treatment. There are
limits to the deduction and it phases out dollar for
dollar after $530,000 of equipment is acquired.
Businesses are eligible for standard
depreciation for amount in excess of $134,000.
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