Tax Information: What Is IRS Section 179?
What is IRS Section 179? Section 179 of the Internal Revenue Code provides a valuable deduction on equipment purchases for business owners. Prior to 2003, the maximum amount that could be expensed (deducted from taxable income) immediately was $25,000. For 2003, 2004 and 2005, this limit has been raised to $100,000. After 2005, the limit will return to its fixed level of $25,000. This means there are big incentives for business owners to take advantage of the opportunity to purchase and expense property before the $100,000 level drops back down. Tangible personal property such as machinery, computers, off-the-shelf computer software, office equipment and some vehicles can be expensed if installed by December 31st. Equipment placed in service on the last day of the taxable year can still be fully expensed and does not need to be prorated. To qualify for the deduction, business use of the assets must exceed 50% in the year they are placed into service. If business use is less than 100%,
