Good News. Bad News.

When buying furniture and equipment, the Internal Revenue Code Section 179 allows a business an option to write off the total cost in the year purchased. This is true whether or not you have made all the payments for the purchase.  So if you bought it on credit you can still get the deduction. That is the good news. And that is the bad news.

The good news is that the deduction reduces your current year taxable income and possibly your tax.

The bad news is that you may need the deductions more in a future year.  And the deduction may be limited depending on your income.  And the rules have some twists and turns.  And, if you sell it, all the proceeds are taxable.

Don’t presume that it is best to take the deduction this year. Ask your Tax Professional.  More good news,  you now have enough information to ask some intelligent questions.

And, of course, you must keep good records.

Hint – Make a folder for each of your large purchases that have a warranty.  Put a copy of the receipt, warranty and instruction book in the folder.  A few months ago, I received a new part for my office chair because I could easily put my hands on the warranty and receipt.

Related articles

• Tax Deduction for 2013 with Section 179 (officesystemsnews.wordpress.com)
• Section 179 election in synopsis (planoaccountant.wordpress.com)