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Take Advantage of Section 179

     Most companies should take advantage of the Section 179 tax break that provides for first-year depreciation allowance for equipment.
     Simply put is one of the most extensive tax breaks business owners can achieve.
     With Section 179 owners can write off business equipment in one year, rather than depreciating it over several years. This includes computers, copiers, fax machines, telephone systems and office furniture.
     The annual Section 179 allowance for taxable years beginning in 2006 is $108,000 (up from $105,000 in 2005).
     Without Section 179 money spent to purchase business-related equipment must generally be recovered over a period of years, through depreciation or amortization.
     The amount you write off for Section 179 can’t exceed the taxable income from your business’ Section 179 election.
     Businesses can also carry over any excess to future years if the income limitation is triggered. The deduction also begins to phase out when owners buy more than $430,000 worth of equipment during 2006 (in 2005, $420,000).
     Companies can utilize their full $108,000 tax break for 2006 (up from $105,000 in 2005). As a result buying equipment near the end of the year can be beneficial.
     Companies that “place it in service” by December 31 can deduct the equipment with Section 179. Those business owners can even pay for it next year on credit and still write it off on this year’s tax return.

Section 179 Eligibility
In order to qualify for the Section 179 tax break, you must use the equipment more than 50 percent of the time for business. (If you use it for personal purposes too, you must keep records and you’re only allowed to deduct the business-related percentage.)