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Section 179 Expensing Limits for Businesses Drastically Increased for 2008

For years beginning in 2008, the maximum Section 179 expense deduction is raised to $250,000. The $250,000 limitation is reduced by the amount by which the cost of Section 179 property placed in service during the tax year beginning in 2008 exceeds $800,000.

For tax years beginning after 2008 and before 2011, the expense and threshold levels will revert back to the old law.

Section 179 Assets

In order to qualify as a Section 179 asset, the asset must be acquired by purchase for use in the active conduct of trade or business and is either (1) tangible property or (2) off-the-shelf computer software placed in service during the tax year. However, there are income limitations that could reduce or eliminate these benefits. 

Coordination with Bonus Depreciation

• When eligible and elected, the Section 179 deduction must be taken before the bonus depreciation.
• Section 179 assets are not required to be new, whereas in most cases, bonus depreciation assets must be new.

The amount expensed cannot exceed the taxable income derived from the active conduct of a trade or business.

Questions on the Economic Stimulus Act of 2008? Contact Craig Maksymiak at 312-980-2977 or your Blackman Kallick representative at 312-207-1040.

Read our full article on the Economic Stimulus Act of 2008

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.