Section 179 Offers Small Business Big Break
by February 16, 2004 12:00 am 60 views
Business owners preparing for the March 15 tax-filing deadline may do well to look over some of the finer points of the 2003 Tax Act.
Before the 2003 Tax Act, the depreciation cost of a business’ property up to $25,000 could be deducted and anything over was subject to regular depreciation rates to be spread out over several years. However, Internal Revenue Code Section 179 of the 2003 Tax Act increased the first year deduction allowance of property assets to $100,000, in most instances allowing full deductions almost immediately, said John Ervin, CPA and owner of Ervin & Co. in Fayetteville.
Ervin said that in order to qualify, owners must have property that is either new or used tangible personal property which is not real estate. This generally means equipment, furniture, some storage facilities and single-purpose agriculture or horticultural structures, like a chicken house or a greenhouse, Ervin said.
Tim Fulmer, CPA and partner at Lundy Allard & Co. PLLC, in Rogers, said that individuals or entities electing Section 179 are limited to the amount of income brought in by the business or individual, as the case may be.
“Caution must be exercised because the taxpayer could lose depreciation deductions if the total amount of Section 179 claims are over $100,000,” Fulmer said.