Business deduction for the entire cost of qualified property

Businesses should consider accelerating purchases into 2012 to take advantage of the still generous Code Sec. 179 expensing. Qualified property must be tangible personal property that a taxpayer actively uses in its business, and for which a depreciation deduction would be allowed. Qualified property must be newly-purchased new or used property, rather than property the taxpayer previously owned but recently converted to business use. Examples of types of property that would qualify for Code Sec. 179 expensing are office equipment or equipment used in the manufacturing process. Additionally, Code Sec. 179 expensing is allowed for off-the-shelf computer software placed in service in tax years beginning before 2013.

If a taxpayer’s equipment purchases for the year exceed the expensing dollar limit, the taxpayer can decide to split its expensing election among the new assets any way it chooses. If the taxpayer has a choice, it may be more valuable to expense assets with the longest depreciation periods. As long as the taxpayer starts using its newly-purchased business equipment before the end of the tax year, it may take the entire expensing deduction for that year. The amount that can be expensed depends upon the date the qualified property is placed in service, not when the qualified property is purchased or paid for.


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