Tax Guru – Ker$tetter Letter

I have noticed some tax guides that do erroneously show the maximum Section 179 deduction dropping to $25,000 after this year; so this email wasn’t unexpected.

Q:

Subject: section 179 for assets purchased in 2006

 

Hello,

 

Sorry to bother you. We were completing some tax planing and I noticed on taxguru.org that there is a section 179 deduction schedule that shows $108,000 and 108,000 + COLA for years 2006 and 2007. I can’t seem to find any support for that on www.irs.gov. My understanding was that 2005 was the last year for increased maximum deduction.

 

Could you provide me with an irs link that supports the section 179 deduction amounts for 2006 and 2007?

 

Thank you,

A:

If you download the IRS’s recent announcement for 2006 inflation adjusted figures  that I mentioned on my blog, you will find the following on Page 13 of that pdf file:

.18 Election to Expense Certain Depreciable Assets. For taxable years beginning in
2006, under § 179(b)(1) the aggregate cost of any § 179 property a taxpayer may elect
to treat as an expense shall not exceed $108,000. Under § 179(b)(2) the $108,000
limitation shall be reduced (but not below zero) by the amount by which the cost of
§ 179 property placed in service during the 2006 taxable year exceeds $430,000.

I hope this helps.

Kerry Kerstetter