An online resource that provides ongoing coverage of Section 179 Deduction news recently announced that H.R. 5771, the Tax Extenders Bill, passed by the House on December 3, 2014 to expand the Section 179 deduction limits, will likely be voted on by the Senate sometime within the next few days.
Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of financed or leased equipment and off-the-shelf software that qualifies for the deduction. The equipment purchased, financed or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken. For tax year 2014, this means the equipment must be put into service between January 1, 2014 and December 31, 2014.
Andrew Goodman, CEO of Iowa-Nebraska Equipment Dealers Association, said, “We’re getting calls every day from farmers, from equipment dealers wanting to know the status of this issue and now it’s all in the hand of the United States Senate…If you look at small town Nebraska, in almost all small towns there are equipment dealers. In many cases, they are the larger employees, so their sales, the employment in those communities is dependent on the flow of agriculture and agricultural equipment.”
As NBC Nebraska explains, Section 179 allowed farmers to expense up to $500,000 of new equipment tax-free and expired in December 2013. Farmers can currently only exempt $25,000 worth of equipment, causing many to delay purchases until congress makes a decision. This provision only covers this 2014 tax year and does not cover 2015 tax year, making it a good business decision to buy or finance equipment before the end of the year. Many farmers are waiting for a decision from congress before they make any significant equipment purchases.