Section 179 Roller Coaster Blues

By | February 9, 2015

section 179 deduction limitsOk, I know I just posted on Section 179 a few weeks ago, but it’s worth talking about again. Because even though I’m a little kid at heart and like roller coasters, I’m a little tired of this one.

In short, the 11th hour raises of Section 179 are great for members of congress to point to and say “yes, we did something for small businesses”, but the reality is, they often come way too late in the year for many of the companies it’s designed to help.

Let’s look at two years in particular – 2012 and 2014. In 2012, Section 179 sat at $125,000 all year. Now that’s not a horrible number, but it’s also a far cry from the 500k it was in 2011.

Then, in early 2013, congress acted and made Section 179 $500,000 for 2013, and reached back and made that $500,000 retroactive for 2012. And then they patted themselves on the back and held another fundraiser.

The problem here is any business that was putting off buying something expensive (say, more than $125,000) in 2012 because they were waiting for an increase, totally missed the boat. Yes, one could argue that they could now buy the item in 2013, but that doesn’t help 2012’s numbers, does it? And if it was a machine that would have helped turn a better profit, it hurts even more.

The same thing happened last year. Section 179 sat at $25,000 for all of 2014, until it was finally raised to $500,000 on 12/19. That gave businesses a whopping 12 days (with Christmas smack in the middle) to act.

“On the first day of Christmas, Congress gave to me… no time to claim my de-duct-tion”

(go with me here… a songwriter I am not).

Do you see the problem here? We need congress to act earlier in the year, and allow true small businesses – perhaps those without the financial resources to “buy now and hope for an increase”  – a chance to utilize the tax deduction the way it was meant to be used.

Section 179 is now at $25,000 for 2015. Based on the past, we all know congress is going to eventually raise Section 179 for 2015 – the question is when. For me, the answer should be “right now”.

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