Under section 179 of the IRS tax regulations, you may elect to recover all or pa

Question

Under section 179 of the IRS tax regulations, you may elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is called a section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by taking the depreciation deduction. Required: Discuss the reinstatement of Section 179 in the tax year 2014. Argue that the re-instatement of Section 179 in the tax year 2014 will help to stimulate the U.S. economy.

Explanation / Answer

In 2014, Section 179 was dropped to the limit of $25,000, with a spending cap of $250,000, and no bonus depreciation was allowed. This section was then re-instated in December 2014 by congress to $500,000 for the entirety of 2014, brought back the two million dollar spending cap, and the 50% bonus depreciation. This amendement was made with retrospective effect for the whole tax year 2014.

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