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Expired deductions may change tax filing strategy for businesses

March 20, 2014

The end of the 2013 year brought with it the end of several tax breaks, most notably the enhanced Section 179 deduction and bonus depreciation. For tax years beginning in calendar year 2014 and beyond, these major tax breaks for assets used in business have been drastically reduced. For tax years (whether calendar or fiscal) beginning in 2014, the dollar limit for Section 179 expensing of assets is reduced from $500,000 to $25,000. The ability to utilize the Section 179 expense deduction in 2014 and beyond will begin to phase out when the total cost of qualifying property exceeds $200,000. (Previously, the phaseout did not begin until the cost of qualifying property exceeded $2 million.) Additionally, computer software and limited types of building improvements will no longer qualify as Section 179 property.

Bonus depreciation, which resulted in an immediate deduction of 50% of the cost of an item of qualified property, has ended for property placed in service after December 31, 2013.

For further questions or to address the ramifications that the expiration of these deductions may have for you, please call your account manager at The Marston Group, PLC at 901.761.3003. We will be reaching out to our clients throughout the year to let you know how law changes may affect you, as well as to explain the underlying concepts contained in these new complex regulations. 

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