Section 179 of the U.S. tax code presents a welcome opportunity for small business owners to save money at tax time. An economic incentive designed to encourage the purchase of business-related equipment, Section 179 lets taxpayers deduct the full cost (within limits) of certain types of property from their federal taxes for the year the property was purchased and put into service.
Previously in a state of flux from tax year to tax year, the U.S. House of Representatives and Senate approved a bill to permanently raise the Section 179 deduction limit to $500,000 on "qualifying equipment" last December. According to the IRS' definition, qualifying equipment includes machinery, computers, office furniture and software. Visit the IRS website to see the list of purchases that qualify
While many people can and do apply the Section 179 deduction to vehicles purchased for business reasons, small business owners should keep in mind that there may be restrictions in place for this type of purchase.
The IRS has laid out specific guidelines
for vehicles that are likely to qualify for the full $500,000 deduction, including vehicles unlikely to be used for personal use such as those with a fully-enclosed
driver's compartment/cargo area, and passenger vehicles that are subject to certain deduction limits, even if they’re used for work more than 50% of the time.
If you purchased or plan to purchase a new work vehicle in 2016 using the $500 cash allowance from FCA US LLC, eligible to all ABC members, you may benefit from Section 179, regardless of deduction limits. Consult this worksheet
to see the estimated Section 179 expense allowances for Chrysler, Dodge, Jeep®, Ram
and FIAT® brand vehicles.