Tax Guru – Ker$tetter Letter

Q:

Subject: Section 179 for 2009

Hello Mr. Kerstetter,

My company is trying to publish some Section 179 information for our lessees. We are having a difficult time gathering some of the information. Your website typically lends itself to helpful and up-to-date facts. Is there a place I could go to better gather this information? I’ve looked at the IRS and their site is difficult to find what I need.

I’m assuming the first year write off is $128,000, but what is Cola?

Also, 2008 is the last year it lists a phase out $ amount.

Thank you,

A:

We’ve been out of power for a while now, so I haven’t been able to update my main website lately. I have attached the Section 179 chart from the latest edition of TheTaxBook.

As you can see, as it stands right now, the 2009 maximum Section 179 deduction is $133,000, which is the base of $125,000 plus an additional $8,000 for the annual Cost Of Living Adjustment (COLA).

As you can also see on this chart, the phaseout of the Section 179 deduction for 2009 begins at $530,000 of new equipment purchases, which is the base of $500,000 plus an additional $30,000 for the annual Cost Of Living Adjustment (COLA).

Preparing a completely accurate long term multi-year chart of the Section 179 limits is close to impossible because it is a favorite item to be changed by our rulers in DC. It is one of the best incentives for small business owners to invest in new equipment, so chances are good that it will be bumped up in future economic stimulation legislation.

As with all tax matters, it is a full time job just staying current on all of the changes; so be sure to include that in any tax related materials you produce. A warning such as “All information presented is subject to changes at the whims of the politicians in DC. Check with your own personal professional tax advisor before undertaking any tax related transactions” would help cover your rear in case someone relies on info you produce that becomes outdated.

Good luck. I hope this is helpful.

Kerry Kerstetter