Annual Tax Updates

Section 179 Limits - Depreciating Assets

The maximum section 179 deduction you can elect from property placed in service in 2014 is $25k (down from $500k in 2013) for qualified section 179 property.  A phaseout of this deduction begins dollar for dollar once a taxpayer goes above $200K in purchases of qualifying property.  Deductions are also limited by the amount of taxable profits for the year.

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Pre-2014 Tax Increase Prevention Act Law

 Bonus Depreciation

de-pre-ci-a tion //noun

1. A system of accounting which aims to distribute the cost or other basic value of tangible capital assets, less salvage (if any), over the estimated useful life of the unit

For 2013 law allows 50% "Bonus Depreciation" on qualified assets placed in service during 2013. Bonus depreciation can be taken on new equipment only. For 2014 Bonus Depreciation is currently limited to a small subset of qualifying property, but there is a move in congress to fully extend the Bonus Depreciation provision on a permanent basis.

For more information on these rules please visit “How to Depreciate Property”, or contact us.

Protecting Americans from Tax Hikes Act of 2015

The "Protecting Americans from Tax Hikes Act was signed into law on 12/18/15.  Section 1779 is permanent at $500,000, until further notice.  Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million.

Pre-2014 Tax Increase Prevention Act Law

50% Bonus Depreciation will be extended through 2019.  Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in serving during 2015, 2016 and 2017.  The Bonus Depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

Protecting Americans from Tax Hikes Act of 2015