What is Section 179, and how does it work?
In simple terms, Section 179 is an attempt by the United States government to stimulate the economy by encouraging small to medium sized businesses to purchase equipment this year by making it very advantageous in a tax sense. In a nutshell, it works like this: Normally, when a business purchases equipment, they do not get to “write it off” right away. They instead must “depreciate” it over the course of several years. So a business could not realize the full tax advantages until years after the fact. Section 179 does away with this, and allows certain pieces of equipment (including most electronics and office machines, and even some vehicles) to be deducted in full the year they are purchased. This is an enormous differential, and indeed spurs many businesses to make year-end purchases (because the equipment must be purchased and put into service by midnight 12/31/2007.) Consider this: Under the old provision of depreciation: A business purchases a $5,000 computer system, and yields a
