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.

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.

 

In 2010, under Section 179 of the IRS Code business may expense the first $250,000 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 $250,000 of equipment is acquired. Businesses are eligible for standard depreciation for amount in excess of $250,000.

Section179lease.com is an informational site designed for businesses that are considering acquiring business equipment and are interested in potentially lease financing. It is developed and sponsored by Encore Leasing Group, LLC.

The information provided herein is a distillation of information from the Section 179 of the US Internal Revenue Tax Code and should only be used as a guide and not as a basis in making any tax planning decisions; any such decisions should be made after discussions with a qualified tax advisor or CPA.