Optimizing your tax deductions

Section 179 and the 50% Rule. The Section 179 Rule allows business to deduct the full purchase price of qualifying equipment and software purchased during the tax year, rather than capitalizing and depreciating the cost over time.

The 50% Business Use Rule. To qualify for the Section 179 deduction, the property must be used more than 50% for business purposes. The tax payer must use the business property more than 50% fore business in the year placed in service to claim a Section 179 deduction. The Section 179 deduction is allowed only for the business use portion of the property. If the property is also for personal use, that part cannot a deduction. Similarly, if the business use is not more than 50% in future years, the tax pyaer must include a portion of the Section 179 deduction in income.

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