Year-End Tax Planning Tip: Purchase Assets In Your Business

If you expect a large net income from your business in 2016, then taking advantage of the IRS Section 179 expense deduction by purchasing assets before December 31 will help reduce the net income of the business for tax purposes. The Section 179 expense deduction allows a business to write off the cost the cost of up to $500,000 of eligible asset purchases in the year that the assets are placed in service. Assets qualifying for the Section 179 expense deduction include:

1. New and used computers, computer equipment, machinery, office equipment, office furniture, and vehicles.

2. Computer software purchased off the shelf.

3. Qualified restaurant equipment, retail improvements, and leasehold improvements.

For the year 2016, the $500,000 Section 179 expense deduction is reduced when qualifying asset purchases exceed a $2,010,000 investment ceiling. Also, this $500,000 amount is limited to the taxable income from your active trade or business. This means that if your business has a net loss in 2016, then the Section 179 election can’t be used and assets should be depreciated instead. Property lives for depreciating assets under MACRS include 5 years for vehicles, trucks, computers, and peripheral equipment and 7 years for office furniture, fixtures, and industrial equipment.

For more information about the Section 179 expense deduction, please contact us today.

If you have questions about starting, growing, or selling your small business, please contact us. As a CPA, Certified Business Advisor, Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners just like you and provide tax, accounting, financial analysis, management, business planning, and small business advisory services. We can advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at