Federal tax
Section 179 deduction
The Section 179 deduction is an election that lets a business deduct all or part of the cost of qualifying property in the year it is placed in service.
Section 179 is an alternative to slow depreciation. A business can elect to deduct the cost of qualifying property in the first year, up to a dollar limit. The IRS sets limits that change by tax year, so check the limit for the year you buy the asset.
The deduction cannot exceed the taxable income from the active business. It applies in the year the property is placed in service, not the year you order it. The election is made on Form 4562. Planning matters, because a large first year deduction lowers later deductions and changes the asset's cost basis. The tax planning page describes year end timing.
Related terms
Sources
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Call the Southlake office and say what you need: a return, an IRS letter, your books or a new business. Have the notice or last year's return nearby if you have one.