Section 179 Tax Relief From Depreciation Rules
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
Section 179: Tax Relief from Depreciation Rules
Summary:
Depreciation often causes headaches for business owners. However, the expanded provisions of Section 179 offer much-needed relief.
Article Body:
Depreciation can be a daunting word for business owners. Thankfully, Section 179 has been expanded to alleviate these concerns.
Understanding Depreciation
Traditionally, if your business owned property with a lifespan exceeding one year, its cost had to be deducted over several years. The duration depended on the property's specifics, making depreciation a classic example of tax code complexity. Fortunately, substantial relief is now available.
Benefits of Section 179
Section 179 of the Internal Revenue Code has been significantly expanded, especially benefiting small businesses. This code allows businesses to fully deduct the cost of tangible property in the year it’s purchased. The relief comes from an increased cap on the allowable annual deduction.
Significant Deduction Increase
As part of the Job Growth and Reconciliation Act of 2003, the annual deduction cap rose from $25,000 to $100,000, with adjustments for inflation each year. This is excellent news for businesses.
Eligible Property
Under Section 179, you can deduct the cost of:
1. Machinery and equipment
2. Furniture and fixtures
3. Computer software
Remember, you'll need to elect Section 179; it’s not automatic. Simply fill out IRS Form 4562 and attach it to your business tax returns.
Conclusion
Remarkably, the government has taken a commendable step by expanding Section 179. Small businesses, frequently overwhelmed by regulations and costs, benefit significantly from this tax relief. Let's hope for more supportive measures ahead.
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