Eyes Open For Depreciation & Write-Offs

Small businesses need to think strategically, as it may be a good year for equipment upgrades- take advantage of section 179

What is section 179? An IRS set of guideline for write-offs and deductions.

What is the business  benefit?

Write off an asset’s entire depreciation this tax year:

    • For 2014, Section 179 allows businesses to write off up to $25,000 worth of new business equipment.
    • Assets purchased on any day of 2014 are eligible, including equipment such as computers, phones, machinery, and furniture – anything that typically depreciates over 5 or 7 years.
    • Be sure to speak with your tax professional to make sure that Section 179 makes sense for your business, and that you are making a sound investment.

If you’ve been thinking about investing in equipment upgrades, 2014 may be the year to do so.  With Section 179 benefits for 2014 allowing a one-time write-off on the purchase of new business equipment worth up to $25,000, an investment in equipment in 2014 will not only get you situated with the latest and greatest, but can also carry an added tax and cash flow benefit.

Not familiar with Section 179?

This section of the IRS tax code allows a business to deduct the depreciation expense for an equipment investment all at once in the current tax year, instead of being spread over the typical 5 or 7 years.  Up to $25,000 of the cost of any equipment purchased during the current calendar year – January 1 to December 31, 2014 – is eligible for the deduction, meaning it can be completely depreciated on the business tax return for 2014.

The main benefit of Section 179

The main benefit of Section 179 is to your cash flow: the asset can be paid for over time, but the depreciation can be taken this year.  Typical assets that businesses write off with Section 179 include computer equipment, phone/communication systems, any machinery used by your business, and furniture and fixtures – basically any equipment that generally carries a tax depreciation of 5 or 7 years.

The allowable maximum 

The allowable maximum for Section 179 varies from year to year, but of course, business assets purchased in 2014 in excess of this year’s $25,000 limit can still be depreciated over their useful tax life.  As always, it is important to plan your investments not only from a tax and cash flow perspective, but also from a sound business perspective.  In addition to providing a tax advantage, a sound investment should also improve one or more aspects of your business, whether sales, operational or financial.

To be safe, when considering a major equipment purchase always discuss the parameters of Section 179 with your accountant.  A tax professional will help you make sure that Section 179 makes sense for your particular situation for the current tax year.


Questions, comments? We’d like to hear from you in the comments section below or [email protected]

The purpose of this article is to provide general best practice guidelines. This article is not written as legal or tax advice directed at the particular facts and circumstances of any specific person or business. We recommend you consult your local CPA or attorney to ensure your unique and specific needs are fully addressed.


Alex Hart
Alex Harthttps://hvandpartners.com
Alexander J. Hart of Cuban American decent is principal and founder of Hart Vida Partrners. With over 25 years of experience, Alex specializes in the areas of tax strategy and planning, business process improvement, and capital consulting. Whether advising on capital and financing strategy or consulting for privately-held professional services firms, Alex has the expertise and practical know-how to help any company optimize their business processes and make tactical financial decisions. He began his career at IBM in sales operations and accounting. He was a Controller for the N.Y. Post, has been a CFO for a medical device company, and has written a tax column called “Ask the Tax Guys” for Micro-Cap Review. Alex is a professional member of A.L.T.A. (Affiliated Lawyers of the Americas), a member of the National Association of Tax Preparers, and is a contributing author and mentor at Latin Business Today. Alex graduated from St. John’s University with a B.A. in Spanish and his M.B.A. in Finance. He obtained his accounting degree from Pace University.