Construction Accounting Article -
Expanded Section 179 Break Lives On

Target Audience: Construction Industry Professionals, Year End Tax Planners, Section 179 Interest, Deductions Interest

If you’ve discussed year end tax planning with your CPA, you may have heard about the Section 179 expensing deduction. It allows you to expense (rather than depreciate) the cost of depreciable assets (within certain limits) in the year you place them in service.

After 2007, the deduction was due to dwindle down to a relatively small $25,000 limit with a phase out if total new additions exceeded $200,000. But this provision is indeed a survivor, as Congress has extended the higher limits each time they’ve been set to expire.

The most recent extension gives you three more years (through 2010) to determine which assets you may need to buy so you can make the most of these significant, necessary purchases. SBWOTA also increases what was a $100,000 maximum deductible amount to $125,000, effective for years beginning after 2006. The expense deduction begins to phase out if more than $500,000 of eligible property is placed in service during the year (up from $400,000). These amounts will continue to be adjusted for inflation annually.

Of course, you generally shouldn’t buy a major asset only for tax-saving purposes. But if you need one or more large-ticket items anyway, why not get them while the getting is good?

Find out how our expertise in construction accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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