last update 5-01-2010

2010 Section 179 Expensing

Generally, taxpayers may elect under Code Sec. 179 to deduct (or "expense") the cost of qualifying property used in their business, rather than recover those costs through depreciation deductions. Under prior law for 2010, the maximum amount that a taxpayer may expense wass $125,000 of the cost of qualifying property placed in service for the tax year. This amount is reduced (although not below zero) by the amount by which the cost of qualifying property placed in service during the tax year exceeds $500,000 (the "investment limitation"). These amounts are adjusted annually for inflation.

In general, QUALIFYING PROPERTY is depreciable tangible personal property that is purchased for use in the active conduct of a business or trade. The amount that may be expensed is limited to the taxable income for the tax year that is derived from the trade or business.

The 2010 HIRE Act increases for one year the amount a taxpayer may deduct under Code Sec. 179. For tax years beginning in 2010, the amount that may be deducted is $250,000 of the cost of qualifying property. This is reduced (although not below zero) by the amount by which the cost of qualifying property placed in service during the tax year exceeds $800,000.

Comment

Without further legislation, the dollar and investment limitations for tax years that begin in 2011 will be $25,000 and $200,000, respectively, and will not be indexed for inflation going forward. In addition, the dollar and investment limitations will no longer be indexed for inflation.


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and the law of your state.
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last update 5-01-2010

2010 Section 179 Expensing

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