There has been a lot going on in our Nation’s capital and one of the main topics of discussion is the Section 179 Deduction.
Updated Dec 17, 2014 – H.R. 5771 (the Tax Extenders Bill) passed by the House on Dec 3, 2014 was voted on and passed by the Senate on Dec 16, 2014 retroactively expanding the Section 179 deduction limits thru 12/31/2014.
IMPORTANT NOTE> Only this 2014 tax year will be covered by this measure – therefore it is a good business decision for many to buy/finance equipment immediately to make the December 31, 2014 cutoff for the write-off.
Repeat, this new provision does NOT cover tax year 2015, the law covers tax year 2014 only! To obtain Section 179 Qualified Financing for your business, you must apply immediately to make the cut-off at midnight 12/31/2014.
What is Section 179?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the Section 179 Deduction. This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified.
It includes any program designed to cause a computer to perform a desired function. However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software.
In other words, if the core software is standardized, a small amount of customization is OK (but generally websites are not eligible for Section 179).
To read more about Section 179, visit: http://www.section179.org/
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To ensure compliance with Internal Revenue Service Circular 230, we inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any tax-related matter(s) addressed herein. Contact your CPA or Accountant to see if Section 179 applies to your business.