Choosing the
Section 179 Expense Deduction
Take Advantage of Year-End Equipment Purchases
Each year under Internal Revenue Code Section 179, the IRS allows a
business to write off up to the full cost of purchased equipment. For 2009
and 2010, the maximum first-year write-off amount allowed is $250,000.
The equipment can be purchased and placed in service at any time during
the tax year. Even if you wait until the last day of the year to purchase
and place in service a piece of equipment, you are allowed the full
$250,000 deduction.
The $250,000 maximum is reduced dollar-for-dollar if your asset purchases
exceed $800,000. This means that if you purchase $1,050,000 of eligible
§179 properties during 2009, no deduction is allowed.
Another limitation is that the §179 deduction cannot exceed your taxable
business income. Business income includes the income from your trade or
business plus wages received by you or your spouse and reported on your
personal Form 1040, if married filing jointly.
You do not have to make the decision whether to claim a Section 179
deduction or the amount of the deduction until you are preparing your
income tax return for the year.
