Why it matters
Section 179 can reduce a profitable business's tax bill in the year it buys equipment. The client still needs the purchase records, the placed-in-service date and the business-use percentage.
Example
A client buys $50,000 of qualifying equipment and places it in service before year end. The preparer reviews the Section 179 limit, the business income and the client's elections before deducting the cost.
Related terms
Questions about Section 179
Does Section 179 apply to every asset?
No. The property must qualify and be used in the business. The rules exclude some property and limit the deduction for assets used partly for personal purposes.
Can Section 179 create a loss?
The deduction is generally limited to the business's taxable income from the active trade or business. A business with no income may not be able to use the full deduction in that year.