• Home
• Leasing Options
• Clune Difference
• Testimonials
• Section 179
• Contact Us
• Applications
• About Us

They have developed customized leasing programs specific to the needs of our industry. Clune has taken away many of the inherent dangers associated with presenting a lease that eventually end up holding our customers hostage. The beauty of Clune is that they have taken away the pain of the past and packaged a solution that will offer overall long-term value for our customers and us. We are also better protected against losing a customer's future business.

James O'Keefe, R.S. Knapp Co Inc

2008 Act Doubles IRS Code Section 179 Deduction to $250,000

By James Ketter, CPA
Miller Haviland Ketter, P.C., P.A.

In 2008 the Section 179 deduction for expensing tangible personal property increased to $250,000 from the $128,000 deduction allowed under prior law. Under the Section 179 expensing election, a taxpayer can deduct costs immediately, rather than depreciating them over several years, provided that the property is actually placed in service during 2008; this election pertains to cash purchases of equipment, as well as to equipment that is financed using lease contracts or loans. There is no alternative minimum tax adjustment for property expensed under Code Section 179. This 2008 increase is a temporary measure that applies only to 2008, and afterwards the deduction limits return to their pre-2008 levels.

Taxable Income Limitation

Under Section 179, most taxpayers can expense an amount up to the amount of taxable income derived from the taxpayer’s active conduct of a trade or business during the year of the property purchase. For sole proprietors who report on Schedule C, and certain individual taxpayers with income from pass-through entities, the amount eligible to be expensed for a taxable year also includes the taxpayer’s salaries and wages and, when filing a joint return, the salaries and wages of the taxpayer’s spouse, together with certain other business income, such as that derived from the pass-through entities. Any amount that is not allowed as a deduction because of the taxable income limitation may be carried forward to succeeding tax years.

As an example, your business might purchase a $70,000 machine for which depreciation deductions are ordinarily available over a 7-year life, with the result that the company can deduct $10,000 [14.29%] depreciation in the first year. Under Section 179, your business can elect to expense the entire $70,000 in the year of purchase.

As another example, your business might purchase a $530,000 machine, in which case you can immediately deduct $250,000 of the cost under Section 179 and then deduct the remaining $280,000 using the bonus depreciation provisions of the new act and/or regular depreciation deductions over a 7-year life. Optimizing Section 179 together with bonus depreciation on a $530,000 machine purchase, in most cases your business can deduct a total of $410,000 in the year of purchase including 3 components: [1] $250,000 Section 179, and [2] $140,000 bonus depreciation at 50% of the $280,000 remaining after Section 179, and [3] $20,000 regular depreciation at 14.29% of the $140,000 remaining after the bonus depreciation.

Annual Investment Ceiling

The Act imposes an $800,000 investment ceiling on 2008 purchases eligible for Section 179, with the result that annual purchases in excess of the annual ceiling reduce the annual $250,000 expense deduction dollar-for-dollar. This 2008 ceiling is a temporary measure that applies only to 2008, and afterwards the ceiling returns to its pre-2008 level.

For example, if your company purchases an $825,000 crane in 2008, the $250,000 Section 179 expensing election is reduced by the $25,000 excess of your $825,000 purchase over the $800,000 ceiling, with the result that your company can only elect $225,000 under Section 179 during the current year taxable year, and must depreciate the $600,000 balance of its purchase over a period of years.