SMALL BUSINESS FIXED ASSET DEDUCTIONS 2018

//SMALL BUSINESS FIXED ASSET DEDUCTIONS 2018

SMALL BUSINESS FIXED ASSET DEDUCTIONS 2018

Some of the changes in the tax reform law mean your small businesses can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.  This means a new computer purchased in December can be expensed on the 2018 tax return.

The Tax Cuts and Jobs Act, passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead.

Section 179 expensing changes

You may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017.

Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. The 2018  changes also modifies the definition of qualified real property to allow the taxpayer to elect to include certain improvements made to nonresidential real property.

New 100 percent, first-year ‘bonus’ depreciation

The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. In general, the bonus depreciation percentage is reduced for property placed in service after 2022.

You may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by you during the year.

For assistance planning expenditures for 2018 contact Tax Management & Financial Horizons, 262 923-8100 Ext 1

2018-11-21T18:12:43+00:00