Your 2013 return may be your last chance for 2 depreciation-related breaks

Wednesday, 19 March, 2014

If you purchased qualifying assets by Dec. 31, 2013, you may be able to take advantage of these depreciation-related breaks on your 2013 tax return:

1. Bonus depreciation. This additional first-year depreciation allowance is, generally, 50%. Among the assets that qualify are new tangible property with a recovery period of 20 years or less and off-the-shelf computer software. With only a few exceptions, bonus depreciation isn’t available for assets purchased after Dec. 31, 2013.

2. Enhanced Section 179 expensing. This election allows a 100% deduction for the cost of acquiring qualified assets — including both new and used assets — up to $500,000, but this limit is phased out dollar for dollar if purchases exceed $2 million for the year. For assets purchased in 2014, the expensing and purchase limits have dropped to $25,000 and $200,000, respectively.

Even though this may be your last chance to take full advantage of these breaks, keep in mind that the larger 2013 deductions may not necessarily prove beneficial over the long term. Taking these deductions now means forgoing deductions that could otherwise be taken later, over a period of years under normal depreciation schedules. In some situations, future deductions could be more valuable, such as if you move into a higher marginal tax bracket.

Let us know if you have questions about the depreciation strategy that’s best for your business.

Your email is never shared.
Required fields are marked *





The blogs were developed with the understanding that Steiner & Wald,  CPAs, LLC is not rendering legal, accounting or other professional advice or opinions on specific facts or matters and recommends you consult a professional attorney, accountant, tax professional, financial advisor or other appropriate industry professional.  These blogs reflect the tax law in effect as of the date the blogs were written.  Some material may be affected by changes in the laws or in the interpretation of such laws.  Therefore, the services of a legal or tax advisor should be sought before implementing any ideas contained in these blogs.  Feel free to contact us should you wish to discuss any of these blogs in more specific detail.