Increase in elective expensing (Section 179” expense)
In lieu of depreciation, businesses may elect to expense (within certain limits) the cost of new or used depreciable
business property and/or software purchased during the taxable year.
Before enactment of the 2008 Act, you were allowed to expense qualified
purchases of up to $128,000, provided all such purchases for the year did not exceed $510,000.
If purchases of depreciable business property and/or software exceeded $510,000,
then you had to reduce the amount expensed under this rule on a dollar-for dollar basis so
that no expensing was permitted if your total purchases of business property totaled $638,000 or more.
Expensing under this rule is allowed only to the extent the business generates taxable income.
The 2008 Act increases the amount a business may expense from $128,000 to
$250,000 and increases the limitation on purchases from $510,000 to $800,000.
Purchases of depreciable business property and/or software in excess of $800,000 reduce the expensing
limitation on a dollar-for-dollar basis. Amounts expensed under this rule continue to be limited to taxable income.
Please see your accountant for more details as to how this may impact your project.
