Great News! Section 179 Signed into Law
Applies to 2015, if Delivered this Year
Under current legislation, the bonus depreciation is extended through 2019. This allows businesses to apply a 50 percent bonus depreciation to any equipment bought during and delivered this fiscal year. This applies to capital leases and can also be passed in TRAC and specific operating leases by the lessor.
For example, 50 percent of any equipment delivered on or before Dec. 31, 2015, can be depreciated on a company’s 2015 taxes, with the rest depreciated over the remaining useful life of the equipment.
The current bill allows the full 50% for property placed in service during 2015, 2016 and 2017, then phases down to 40 percent in 2018 and 30 percent in 2019, according to an analysis by John McClelland with the American Rental Association (ARA).
There’s better news on the Section 179 front. The Section 179 cap, which was reduced to $25,000 for fiscal 2015, not only went back up to the $500,000 cap in effect from 2010 to 2014.
Section 179 will be permanent at the $500,000 level. Businesses exceeding a total of $2 million of purchases in qualifying equipment will have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.
This section of the tax code, according to the section179.org website, allows businesses to deduct from its gross income the full purchase price of qualifying equipment bought during a tax year, instead of depreciating it over time. If you exceed a total of $2 million in annual qualifying equipment purchases, there’s a dollar-for-dollar phase out of the depreciation until it’s completely eliminated above the $2.5 million level.
Here is a summary from the Congressional Ways and Means Committee “Protecting Americans from Tax Hikes Act of 2015:”
(See Section 143 on Bonus Depreciation and Section 124. There
are many other tax incentives in the summary).
As Published in Leasing News 12/21/2015