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Downloading a tax break before year-end: off-the-shelf software

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. Should I buy off-the-shelf software for my business before 2012? I’m not sure if a tax deduction is expiring. A.F., Palo Alto, Calif.

A. Undoubtedly, you’re referring to the Section 179 deduction allowing current deductions.

Normally, the cost of off-the-shelf software must be amortized over 36 months for tax purposes. But the 2010 small business law permits a Section 179 deduction for this software for tax years beginning before 2012. Then the tax break was extended to tax years beginning before 2013 by the 2010 Tax Relief Act.

You can also claim the 100% first-year bonus depreciation break for new software that is placed in service by Dec. 31, 2011.

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