When To Pass Up Sec. 179 Tax Break

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in Small Business Tax,Small Business Tax Deduction Strategies

Q  I quit my job this year and started a sole proprietorship. It’s going well, but the business will show a loss in 2007. Can I deduct business assets I bought against my salary under Section 179? E.P., Houston

A  Yes. The Sec. 179 deduction may offset taxable income from all your business activities. The maximum deduction for 2007 is $125,000. But you might choose instead to write off business assets over time through regular depreciation deductions. Reason: The prolonged deductions can offset taxable income and self-employment tax in future years when your business begins to turn a profit.

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