The Real Fiscal Cliff Change for Business Will Be Depreciation


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But there are other deduction changes that business owners need to watch.

Bye Bye Bonus Depreciation& Section 179

Ten years ago, Congress gave businesses additional first-year bonus depreciation. There are limits to the amount of depreciation you can take. And the assets must be brand new when you put them in service.

Initially the amount of bonus depreciation you could take was 50% of the asset value. This was later expanded to 100%.

The bonus depreciation completely goes away in 2013.

Section 179 expensing allows businesses to take an immediate expense for assets put in value that normally would have to be depreciated over time. The assets could be used, but they have to be personal property items.  In 2013, this rolls back to just $25,000, after having been as high as $500,000 in a year.

Congress may change these laws, but at this point, businesses are about to lose a powerful incentive to invest in 2013.



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