Question

Mark Richmond bought equipment for his business and has heard that there are special rules which, instead of regular depreciation, will enable him to elect immediate expensing of the equipment he bought this year. Can he do this? > What Federal Tax handbook paragraph provides secondary authority? > What is the primary Code section that deals with this question? > Identify any additional facts you will need to address this question. Explain in a sentence why you need each additional fact. NOTE: The tax year is 2018 unless otherwise noted in the facts.

Answer 1

Sec 179 of Tax cuts jobs act deals with this questions that allows expensing of the equipment bought during the year.

Under Section 179, you can claim a deduction in the current year. You’d do this by deducting all or a portion of the cost of certain property as opposed to depreciating it.

You can claim the Section 179 deduction when you placed these types of property into service during the tax year:

• Qualified tangible personal property
• Qualified real property expenditures, which include:
  • Qualified leasehold improvement property
  • Qualified restaurant property
  • Qualified retail improvement property

For 2018 deduction limit increases to $1 million and the limit on equipment purchase is $2.5 million. Every increase above $2.5 million will reduce $ to $ against the deduction $1 million.

To address this question, additional facts required are:

Purchase amount to determine the deduction available.