Sec. 179 Expensing Gets Expansion

Hoping to spur the economy, President Obama has increased the benefits of the Code Section 179 election.  Most new equipment purchases may be depreciated over the life of the equipment or using the Sec. 179 election, expensed in the year of the purchase.

In 2009, the maximum Sec. 179 expense deduction was limited to $250,000.  Under the new law the maximum deduction has been increased to $500,000.  There are limitations to the amount of equipment that may be purchased during the year and still qualify to take a Sec. 179 election.

In 2009, the deduction began to phase out dollar for dollar after reaching $80,000 in total equipment purchases.  Under the new law this limit is increased to $2 million.

There is an additional benefit under the law. The definition of “qualifying property” has been expanded to include qualified real property, which includes qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.  The qualified real property category is limited to a maximum of $250,000 rather than the $800,000 for other property.  The new law is effective for equipment purchases beginning January 1, 2010 and ending December 31, 2011