Tax Help

The Section 179 tax deduction provides an exception for a qualifying capital expenditure. It allows the taxpayer to elect to deduct the entire cost of the capital asset in the first tax year that the asset was put into service with some exceptions.

Here are the property requirements to qualify for the section 179 tax deductions and assist with the tax help you need:

  1. The property in question must fit in the guidelines.  Examples include machinery and equipment, property contained in or attached to a building like signs, gasoline pumps and storage tanks, livestock, etc.
  2. The property must have been acquired by the business.
  3. The property must have been obtained through purchase.
  4. The property must not fall into the guidelines in Publication 946 under “what property does not qualify.”

Your Section 179 tax deduction is has a limited cost, and that is signified by the capital asset. The amount you can elect to deduct under Section 179 is determined by the business limit and the dollar amount.  Each limit applies to each taxpayer, not each business. If you acquire and put into service more than one qualifying capital asset during the year, you can allocate the Section 179 tax deduction among the capital assets in any way, as long as the total deduction does not exceed the dollar limit. Deducting part of the cost of the qualifying capital asset as a Section 179 tax deduction, you can generally depreciate the cost you do not deduct. There are some situations that affect the dollar limit including the cost of the capital asset, certain vehicles, and whether you are married filing a joint or separate return. Total Section 179 deduction is limited to $500,000. After the dollar limit is determined, the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Any cost not deductible in one year under Section 179 because of this limit can be carried to the next year.

-Kelly McGrath, CPA


Community Tax can assist you with tax deductions and additional tax help. Call Community Tax today for more information: (800) 444-0622