Taxpayers may want to consider making fixed asset purchases before December 31, 2012 to take advantage of two accelerated depreciation options:
1.      Bonus Depreciation: For most qualified property placed into service in between January 1, 2012 and December 1, 2012, the maximum bonus depreciation allowance is 50% of the cost of the property.  Purchasing  new assets that have a useful life of 20 years or less generally qualify for bonus depreciation.  Bonus depreciation amounts are based upon a calendar year.
2.       Section 179:  For tax years beginning in 2012, the IRS has set the Section 179 depreciation amount at $139,000, with the total asset purchase phase-out beginning at $560,000 and completely phasing out at $699,000.  This means that the Section 179 deduction is reduced dollar-for-dollar for every additional $1 of assets purchased, up to $699,000.  Both new and used purchases qualify for Section 179.  The California Section 179 has a maximum amount of $25,000 and a $200,000 placed-in-service threshold.  Section 179 limits are based upon a taxpayer’s fiscal year and generally cannot exceed taxable income for the year (before the deduction).
Please contact us with further questions regarding asset qualification and if you can take advantage of these accelerated options before year-end.
Written by Jennifer Schiavone, CPALinkedIn Profile