The 2012 Section 179 Deduction limit after adjustment for inflation has increased to $139,000
The 2012 Section 179 Deduction threshold for total amount of equipment that can be purchased has increased to $560,000.
The Section 179 Deduction is available for most new and used capital equipment, and also includes certain software. Section 179 is limited by income.
The new law allows 50% “Bonus Depreciation” on qualified assets placed in service during 2012. However, this can be taken on new equipment only. Bonus depreciation is not limited by income and is mandatory. IRS requires businesses to make an election to “elect out” of this method.
* Planning Note – Sure, it is well known that businesses can save current year taxes by quickly depreciating assets. This however, can be a double edged sword. Depending on the business owner’s overall financial situation, an owner could very well eliminate valuable current year tax credits by electing to deduct too much depreciation along with potentially forgoing a larger future year tax deduction! Please seek the advice of one of our tax advisors as careful planning is needed when choosing to Section 179 expense or depreciate property.
– Eric J. Buechler, EA