Category: Business Tax Planning
Posted: October 2019
Code Section 179 expensing election has long been a tax boon to small and medium-sized business, enabling businesses to claim immediate deductions, instead of depreciation deductions over time, for many capital assets.
The good news is that the Code Sec. 179 election was expanded by the Tax Cuts and Jobs Act (TCJA) and increased the tax benefit almost universally known as bonus depreciation from 50% bonus depreciation to 100% bonus depreciation.
Even better news is that thanks to the TCJA, the Code Sec. 179 election isn’t the only avenue for immediate tax write-offs for significant capital assets.
Under the 100% bonus depreciation provided by the TCJA, the entire cost of eligible assets placed in service before calendar year 2023 can be written off in the “placed in service” year. Note that generally 100% bonus depreciation and any other changes made to bonus depreciation by the TCJA apply only to property that is both placed in service and acquired after Sept. 27, 2017. Property doesn’t meet the acquisition requirement if it is acquired under a written binding contract entered into before Sept. 28, 2017.
There is considerable overlap, but not complete overlap, between the Code Sec. 179 election and 100% bonus depreciation. So assets that aren’t eligible for one of the benefits may be eligible for the other benefit. Even better, should your capital asset needs grow, 100% bonus depreciation applies without dollar limits.Feel free to contact us to discuss and compare the Code Sec. 179 election and bonus depreciation or to explore other tax matters.
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