Section 179 deductions


J

Jimmy

Could someone please help me to better understand Section 179 deductions?

From what I understand, I can elect to deduct any portion or all of the
expense of a business asset at one time rather than depreciate it over its
expected lifetime. Am I also correct that I can only do this on an asset
that I purchased outright but not if I have an outstanding debt on.

For example, I purchase a used truck for my business with a bank loan for
$15000. I also purchase a trailer outright with company funds for $2500. I
must be depreciated the truck over its useful life but the trailer I can
deduct the entire $2500 purchase price during the year that I purchased it
and not depreciate it.

Have I understood this correctly or am I missing something. If so, please
inform!
 
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P

Paul Thomas

Jimmy said:
Could someone please help me to better
understand Section 179 deductions?

From what I understand, I can elect to deduct any portion
or all of the expense of a business asset at one time
rather than depreciate it over its expected lifetime.

Correct, subject to limitations of business income and a dollar cap.



Am I also correct that I can only do this on an asset that
I purchased outright but not if I have an outstanding debt on.

Nope. You can take Section 179 deductions on property purchased and placed
in service during the year (ie: in December) yet the first payment has not
been made, or that payment will be made over 5 years (or more).



For example, I purchase a used truck for my business with a
bank loan for $15000. I also purchase a trailer outright with
company funds for $2500.

Both the truck and the trailer can qualify for Section 179. Check the
vehicle though to see if the SUV and/or luxury vehicle limits apply.


I must be depreciated the truck over its useful life but the
trailer I can deduct the entire $2500 purchase price during
the year that I purchased it and not depreciate it.

Nope, see above.
 

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