Time’s Almost Up On These Tax Breaks

Will you be needing new equipment (or other fixed assets) for your business in the near future? From a tax standpoint, it would be wise to decide soon.

Bye-Bye Bonus Depreciation
If you postpone your purchases until next year, you’ll miss out on a bonus first-year depreciation deduction of 50% of the adjusted basis (or cost) of qualified new property acquired and placed in service during 2016. The 50% bonus depreciation is subtracted from the property’s cost basis before the regular first-year depreciation deduction is computed.

So Long Generous Expensing
Under Section 179 of the tax code, your business may be able to currently deduct (“expense”) the cost of qualifying new or used assets up to a certain amount. For 2016, the expensing limit was generally $500,000. (The amount of the available expensing election phases out for purchases at $2,010,000.) But in 2014, the expensing limit was scheduled to drop to $25,000 of purchases, and the phaseout would begin when assets purchased exceeded $200,000.