Section 179 Deduction: 50% Bonus Depreciation Extended Through 2013!
**Please note that this article has not been updated for 2014 as Congress has not made a decision about continuing the law or not. We will post an update as soon as we know.
Section 179 has provided businesses with the ability to substantially accelerate depreciation on qualified purchases for the last decade. The limitation on the available deduction grew to $500,000 during 2010 and 2011 as Congress intended for the increased limits to assist businesses in light of the recession. For 2012, the available deduction had initially been $139,000. However, the American Taxpayer Relief Act of 2012 (the “Act”), which was passed on January 1, 2013, retroactively extended the $500,000 expense limitation through 2012 and 2013.
- Section 179 allows businesses to deduct or expense the purchase price of equipment, as opposed to depreciating the equipment over the life of the asset. There are certain limitations that apply to the Section 179 deduction including a $2,000,000 cap on total equipment purchases. Additionally, the Section 179 deduction may not exceed taxable income for the year in which it is taken.
- In addition to Section 179, accelerated (bonus) first year depreciation is also available for certain new fixed asset purchases. For 2012, the bonus depreciation available for purchases decreased from 100% in 2011 to 50% in 2012. The bonus depreciation deduction was scheduled to expire in 2013. However, the Act extended the 50% deduction through 2013.
Read our article on Section 179 and How It Can Affect Your Boat Business
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