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Depreciation deductions: Go against the grain

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in Small Business Tax,Small Business Tax Deduction Strategies

Under Section 179, you can currently deduct up to $250,000 of assets placed in service in tax years beginning in 2010. But not every business can benefit from Section 179 (see box below). You may have to write off assets over the regular depreciation period.

Strategy: Time equipment purchases to suit your needs. Usually, you’ll fare better tax-wise by placing assets into service before Oct. 1. But, surprisingly, you might maximize your deductions after the Sept. 30 deadline.

It all has to do with a special tax rule for assets placed in service in the last quarter of the year.

Here’s the whole story: Under the Modified Accelerated Cost Recovery System (MACRS), business assets placed in service anytime during the year are generally treated as if they had been placed in service on July 1 for depreciation deduction purposes. It doesn’t matter when the assets are actually placed in service. This is called the “half-year conventio...(register to read more)

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