The Section 179 expensing election is one of the most common topics on which I receive questions; so this is a bit of good news. 

As our imperial rulers in DC love to do when they pass laws to control our lives, they toss in a load of items unrelated to the main purpose of the bill.  The Iraq war funding bill that President Bush signed yesterday has its share of unrelated items affecting businesses.

Bad News: Increasing the minimum wage to screw up the natural supply and demand market forces for labor.

Good News: Increasing the 2007 limit for Section 179 from what was $112,000 to $125,000 and increasing the phase-out for this deduction from the previously COLA adjusted limit of $450,000 of newly acquired equipment to $500,000.

Here is the actual text from Page 179 of the 249 page law.

SEC. 8212. EXTENSION AND INCREASE OF EXPENSING FOR  SMALL BUSINESS.

(a) EXTENSION.—Subsections (b)(1), (b)(2), (b)(5), (c)(2), and (d)(1)(A)(ii) of section 179 (relating to election to expense certain depreciable business assets) are each amended by striking ‘‘2010’’ and inserting ‘‘2011’’.

(b) INCREASE IN LIMITATIONS.—Subsection (b) of section 179 is amended—

 (1) by striking ‘‘$100,000 in the case of taxable years beginning after 2002’’ in paragraph (1) and inserting ‘‘$125,000 in the case of taxable years beginning after 2006’’, and

(2) by striking ‘‘$400,000 in the case of taxable years beginning after 2002’’ in paragraph (2) and inserting ‘‘$500,000 in the case of taxable years beginning after 2006’’.

(c) INFLATION ADJUSTMENT.—Subparagraph (A) of section 179(b)(5) is amended—

  (1) by striking ‘‘2003’’ and inserting ‘‘2007’’,

 (2) by striking ‘‘$100,000 and $400,000’’ and inserting ‘‘$125,000 and $500,000’’, and

 (3) by striking ‘‘2002’’ in clause (ii) and inserting ‘‘2006’’.

 (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

Joe Kristan has a good summary of these and other tax related changes in the new law on his blog.   

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 5/26/2007 02:03:00 PM Send this post: