Code section 179 allows for equipment, primarily, to be written off in the year of acquisition. By comparison, if there is no section 179, then equipment must be written off over its useful life.
For example, if a company buys $10,000 of computer equipment, and the useful life is deemed to be five years, then the $10,000 is depreciated on the tax return over five years. If section 179 applies, the $10,000 in computer equipment can be written off in the year it was purchased.
Section 179 is not an all or nothing. If, with tax planning, only $4,000, as an example, is to be written off in the first year, then the remaining $6,000 would be written off over the five year period.
Section 179 applies to both new and used equipment.
Under “old” tax law the maximum section 179 in a year was $500,000. With the “new” tax law, effective September 27, 2017, the maximum is $1,000,000.
There are a variety of additional tidbits which may apply to a specific situation, but hopefully this will be enough to begin the discussion about section 179 utilization.
If you have specific questions please contact Bruce, the Tax Pro, at 818-225-8022, at Bruce@AndersenCPA.com, or follow on Twitter @AndersenCPA.