Section 179 Expensing
A federal tax provision allowing businesses to fully expense the cost of qualifying tangible property and certain real estate improvements in the year of purchase, up to a statutory cap.
Detailed Explanation
IRC Section 179 lets businesses elect immediate expensing of qualifying property up to $1.16 million for 2024 (indexed annually), with a phase-out starting at $2.89 million in total qualifying purchases. Qualifying property includes most tangible personal property, off-the-shelf software, and qualified improvement property (interior nonresidential building improvements). Section 179 cannot create a net operating loss (it is limited to taxable income), unlike Section 168(k) bonus depreciation which can. Often combined with bonus depreciation for layered acceleration.
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Learn about Business Tax PreparationRelated Terms
Depreciation
The deduction of the cost of a tangible business asset over its useful life, reflecting wear, tear, or obsolescence.
Section 168(k) Bonus Depreciation
A federal tax provision allowing first-year deduction of a percentage of the cost of qualifying business property, restored to 100 percent under OBBBA for assets placed in service after January 19, 2025.
Cost Segregation Study
An engineering-based analysis that reclassifies portions of a building into shorter-life property categories to accelerate depreciation deductions in the early years of ownership.
Depreciation Recapture
The portion of gain on sale of depreciated property that is taxed at higher rates rather than long-term capital gain rates, recovering previously claimed depreciation deductions.
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