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Section 179 Update

UPDATE: 12/11/2014 Senator Nelsons’ office in DC. They do expect Tax Extenders bill to be voted on this week. No exact date and time set yet. Defense bill took priority today.

Tax Extenders which includes Section 179 and allows for equipment/property to depreciated in 2014,  is expected to be voted on at any time. Seems there is far more important items on the agenda than a bill that could help the 75% of small businesses that help employee 75% of the people in this country. Sales are slow while buyers and sellers wait to see if this will be voted on to increase Section 179 to it’s limit of $500,000, for the much needed tax breaks for everyone from farmers to IT companies. AG Web news which is following this daily for farmers, dairy and other food processors is lobbying the Senators hard to pass the bill. All expectations is it will pass and the President will vote yes.

HR 5771, the bill to extend retroactively through the end of this month the 55 or so tax breaks that expired at the end of 2013, has been “placed on the Senate Legislative Calendar.” That means it appears to be proceeding to a vote, though I find nothing on when that will happen. Tax Analysts reports that outgoing Senate Majority Leader Reid says he will take up the extender bill ” after finishing work on a defense authorization bill and a government funding measure.” Meanwhile, the President has threatened to veto a separate attempt to permanently extend three charitable breaks in the extender bill, including the break for IRA contributions. While that’s bad for those breaks, it implies that the White House will not oppose HR 5771’s one-year extension.   Because it looks as though the “extender” bill will clear the Senate, taxpayers looking to add fixed assets have extra incentive to get it done this year. The bill extends through 2014 — and only through 2014 — the $500,000 limit on Section 179 deductions and 50% bonus depreciation. These breaks allow taxpayers to deduct over half (bonus depreciation) or all (Section 179) of the cost of fixed assets that are otherwise capitalized, with their deductions spread over 3 to 20 years. Taxpayers should remember that it’s not enough to order or pay for a new asset by the end of 2014 to qualify for these breaks. The asset has to be “placed in service” by year end. A new asset doesn’t actually have to be used during the year to be “placed in service,” but it has to be ready to go. A new machine should be on the floor and hooked up, not just in a crate on the dock, or in a trailer on the way in, if you want to depreciate it. If the new asset is a vehicle, you need to take delivery to get the deduction. If the asset is a farm building, it needs to be assembled and in place, not in boxes on the ground.