Maxine Aaronson, Attorney at Law
Attorneys discussing a case. Glasses resting on documents depicting charts/diagrams. The word 'strategy' is highlighted. Puzzles coming together.

Tax Newsletter

Section 179: Deduction for Business Furniture & Equipment

Under certain circumstances, you may be able to take a one-time deduction for certain business furniture and equipment purchased during a particular tax year. This is commonly referred to as a Section 179 deduction.

Why It Exists

A primary purpose of Section 179 is to provide a one-time deduction for property that would otherwise require relatively complex depreciation calculations each year. However, you may still choose to deduct a portion of the property under Section 179, and take a depreciation deduction on the balance.

Limitation on Deductible Amount

The Section 179 deduction is limited to the following:

  • You cannot deduct more than the cost of the property (that is, you cannot use market value)
  • There is a maximum limit on the total amount you can deduct ($500,000 for 2013)
  • If the property is worth over $2,000,000, you must reduce the maximum dollar limit for each dollar over $2,000,000*
  • Your deduction amount under Section 179 cannot be more than your total taxable income for the year

*Large businesses with capital expenditures over $2,000,000 may elect to take a 50% bonus depreciation of the amount over $2,000,000.

Section 179 deduction may be taken for “listed property” and property purchased for business use.

Listed Property

Listed property are property generally used for entertainment, recreation and amusement. These include items such as telephones, video recording equipment, computers and related equipment. Such property must be used more than 50% for business.

Property Purchased for Business Use

Property purchased for business use may be desks, office chairs, and filing cabinets.

Converted Property

You cannot take a Section 179 deduction for personal property converted to business use. Instead, such converted property must be depreciated.

  • Separate Tax Returns and Itemized Deductions
    When filing your federal tax return, you usually have the option of taking the standard deduction or itemizing your deductions to adjust your taxable income. However, if you are married but filing separate tax returns and choose to... Read more.
  • Employee Leasing to Limit Workers' Compensation and Other Liability
    Over the past several decades it has become increasingly expensive to hire and maintain employees. A large part of the expense relates to government programs and reporting requirements, but accounting costs related to employees have... Read more.
  • New Estate Tax Rates Bring Certainty
    Much to the relief of many, the American Taxpayer Relief Act of 2012 (“2012 Tax Act”) was enacted in the beginning of 2013, making permanent many of the tax benefits that were scheduled to expire at the end of 2012. The... Read more.
  • Tax Treatment of Contaminated Property
    The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes liability for the investigation and cleanup of contaminated real property without regard to whether the landowner created or allowed the... Read more.
Law Commentary Legal News