by FitSmallBusiness.comThe Ultimate Guide
1 7 9Deduction 2013
Section
Section 179 deduction The
is one the biggest deduction available
to businesses.
Section 179 deduction The
for its ability to get a bigger
deduction for these types of vehicles.
It is often referred to as the
“SUV tax loophole” OR
“Hummer deduction”
business owners to deduct up to $500,000 of
qualifying purchases.
The “179 deduction”,
This deduction offers refers to Section 179 of the IRS tax code.
of the 179 deduction as
accelerated depreciation.
Think
to slowly deduct your equipment, material or improvement costs you can elect to depreciate most, or all, of it in the current year.
Instead of waiting,
5, 7, 15 years
To slowly deduct your equipment, material or improvement costs you can elect to depreciate most, or all, of it in the current year.
WhatQualifies?
• Vehicles• Storage facilities and some types of structures.• Machinery • Equipment Livestock
Qualifiers for these deductions:
The IRS calls such property “tangible” property, meaning that it is actual property that exists in a material form.
In the 2013 tax year,computer software
bought off the shelf may also be deducted.
At least 50% of the time, and be purchased in the current tax year.
One of the main requirements is that all the property must be used
in business.
However, if you use your car, for personal reasons also, you may deduct only the business percentage.
Vehicles are also eligible for a substantial deduction.
You would calculate the percentage of hours you use it for work-related purposes, and divide by the amount of time you use it for personal reasons
the usage is based on hours.
If you use your computerfor personal and business use,
179 Deduction
Reasonsto take the
large tax savings can help with
In a year, when business expenditures are high,
cash flow, lower costs, and help your business expand.
Because you deduct the entire amount of your purchase in the year you acquired it, you cannot keep depreciating the items in.
subsequent years.
A business should carefully consider:
• The future deductions
• Expected cash flow
• Whether this deduction would be beneficial.
Section 179Deduction
Section 179
LimitsDeduction
is $500,000.
For 2013 the
deduction limitFor The Section 179
Real property is limited to $250,000 of that limit.
is $500,000.
For 2013 the
deduction limitFor The Section 179
or all of the cost of equipment.
Additionallyyou can deduct part
If you bought a saw for
you can deduct the full amount or
$10,000,
part.
If you used $5,000 as a 179 deduction, the remaining $5,000 could be depreciated.
If you bought a saw for
you can deduct the full amount or
$10,000,
part.
dollar limit The
is subject to limits in the following circumstances:
dollar limit The
amount over $2,000,000 is subject to a reduction, which is reduced dollar for dollar.
Any 179 property
Qualified Business Enterprise Zones Qualify for an increase of $35,000. If
costs exceed $2,000,000 the increase is half the qualified zone property cost.
Sport Utility Vehicles have a limit of $25,000.
Disaster Assistance property
is increased by the smaller of $100,000 or the cost of the qualified section 179 Disaster Assistance property placed in service during the tax year.
Disaster Assistance property
also has an effect on limits. Filing status
Married Filing Jointly taxpayers are treated as one taxpayer in determining any reduction to the dollar limit, regardless of who purchased the property.
is beneficial for many small businesses,
TheSection 179 deduction
and can impact many purchases and decisions.
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