(1) Take a Section 179 for an immediate write-off of all or part of the purchase price, or
(2) Depreciate the property.
In 2008 and beyond, thanks to the Economic Stimulus Act, you actually get a bigger Section 179 allowance and can take 50% in bonus depreciation.
One thing to remember as you are making the decision on whether to take the Section 179 or take the bonus depreciation, is that the Section 179 cannot create a loss. For example, if your business makes a net profit of $50,000 and you have $100,000 possible in a Section 179 immediate write-off, you can only take $50,000. That brings you to zero. The rest of the Section 179 will roll into another year.
On the other hand, depreciation can take you into a loss. So, let’s say you bought new property and had a choice of taking the Section 179 for immediate write off, but limited to the amount of income, or taking the 50% bonus depreciation.
What’s the right answer for you? My favorite: “It depends.” This is one where you’re going to have to do the math calculations – or get someone else to do them for you.