Question

What limitations apply to the use of Section 179 expensing in 2018? What would have been different if this asset had been acquired in 2017?

Answer 1

Under Sec 179 of the U.S. Internal Revenue Code, an immediate expense deduction can be availed by business for depreciable assets such as vehicles, equipments and softwares, instead of capitalizing and depreciating assets over a period of time.

Limitation of Sec 179 is that:

1. Sec 179 deduction is eligible only when a piece of equipment is purchased and the full amount of price is eligible for deduction.
2. Maximum deduction under Sec 179 begining in 2020 can be $ 1,040,000, and the maximum deduction on total amount of equipment purchased is $2,590,000
3. Sec 179 deduction is limited to the assets such as cars, office equipment, machinery and computers.
4. Assets that qualify for deduction must be used 50% or more for business purpose only.