Urgent Update: 11th Hour Expansion of Section 179 Tax Benefits for 2015

The US House of Representatives Committee on Ways and Means has passed the "Protecting Americans from Tax Hikes" (PATH) Act, which, among other things, has expanded the tax deduction for the Section 179 provision for capital purchases through December 31, 2015.

Path ActAccording to the Committee on Ways and Means website, the PATH Act will bring tax relief to private citizens and small business by making a number of temporary provisions permanent, including some of the details of Section 179.

(For more information on Section 179, see our earlier JTECH Blog post on the subject.)

Coverage of the PATH Act is widespread, but for small business operators who want to take advantage of the capital purchases component of the provision, the website Section179.org has a breakdown of some specifics:

Section 179 will be permanent at the $500,000 level.  Businesses exceeding a total of $2 million of purchases in qualifying equipment will have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. Additionally, the Section 179 cap will be indexed to inflation in $10,000 increments in future years.

50% Bonus Depreciation will be extended through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

The specific language of the PATH Act can be found in a Ways and Means Committee summary [.pdf] and the specific reference follows:

Section 124. Extension and modification of increased expensing limitations and treatment
of certain real property as section 179 property. The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software and qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) also are permanently extended. The provision modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016 and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing. The provision further modifies the expensing limitation with respect to qualified real property by eliminating the $250,000 cap beginning in 2016.

The summary also mentions other pertinent information for JTECH clients such as "Section 174 Moratorium on medical device excise tax."

Be sure to consult with your tax professional about how the 11th hour passage of the PATH Act will apply to you, but remember that the immediate benefit for 2015 applies only to purchases in the calendar year 2015.

Ways and Means Committee summary    Section 179.org    PATH Act Summary [pdf]     Section 179 on the JTECH Blog    JTECH Medical Equipment

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