Sec 179 Tax Write-offs up to $ 108,000

**SECTION 179 WRITE-OFF FOR EQUIPMENT**:
You can write off up to $ 108,000 under IRC Code Section 179.
This applies to individuals, partnerships and corporations
It must be qualifying property used in your trade or business.
Property acquired only to produce income from investment property, retntal property or royalty property DOES NOT qualify..




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QUALIFYING TANGIBLE PERSONAL PROPERTY:
To qualify it must be Tangible personal property used in your business—examples: machinery and equipment, furniture, Off-the-shelf computer software. Vehicles qualify but are subject to additional rules and limitations. A SUV is allowed $ 25,000 under Sec 179—other vehicles less.
It has to be a business, not an investment activity or rental.

MUST BE USED OVER 50% IN A BUSINESS:
If you use it primarily for business the first year and later it falls to 50% or less in a later year, a portion of the Sec 179 expense must be RECAPTURED.

LAND AND BUILDINGS DO NOT QUALIFY:
Some exceptions exist such as: single-purpose agricultural structures and storage facilities for petroleum products.

CANNOT DEDUCT MORE THAN YOUR BUSINESS INCOME:
Business income includes your wages as an employee plus profits from partnerships, S Corporations and sole proprietorships. You can also use gains from sales of business assets under IRC Sec 1231 (this does not include gains from real estate sales). NOTE: You can add your wages and your spouses wages to the total earnings from self-employment as 'business income" but the equipment must be used in YOUR business, not as an employee of another business.

CANNOT BE ACQUIRED BY GIFT, INHERITANCE OR TRADE-IN.
You must purchase the equipment in order to take a Sec 179 deduction. In the case of a trade-in you can take a deduction for the amount of cash you paid in addition to the property you traded in.

IF YOU OWN AN INTEREST IN SEVERAL S CORPORATIONS OR PARTNERSHIPS:
Each of these businesses has the same limits as an individual, and if your share of these write-offs from the combined total of these businesses in which you have ownership exceeds your individual allowable write-off, you cannot take the excess. If one of them takes the $108,000 write-off and you own 50% of the business, you would get a potential of $ 54,000 write-off. But if you owned 50% of three businesses that took the $ 108,000 write-off, you would only get 2/3 of the total; i.e. $ 108,000.

IF YOU BUY SEC 179 PROPERTY COSTING OVER $430,000:
If you buy property in excess of $ 430,000 , your Sec 179 deduction is reduced dollar for dollar by the excess.

SECTION 179 CARRYOVERS:
If you are unable to deduct the cost of any Sec 179 property due to the business income limit, you can carry it forward. Report it on line 13 of Form 4562 and carry it over to the next year.

Link to IRS forms and publications:
http://www.irs.gov/formspubs/index.html




This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.