J.K. Lasser's Small Business Taxes 2013 by Barbara Weltman

Author:Barbara Weltman
Language: eng
Format: epub
ISBN: 9781118416730
Publisher: John Wiley & Sons, Ltd.
Published: 2012-10-09T16:00:00+00:00

DOLLAR LIMIT

You cannot deduct more than the applicable dollar amount in any 1 year. This dollar limit ($139,000 in 2012) applies on a per-taxpayer basis. For businesses within empowerment zones or the District of Columbia, the dollar limit is increased by the smaller of $35,000 or the cost of qualified Section 179 property within these areas if Congress extends this break.

If an individual owns more than 1 business, he or she must aggregate first-year expense deductions from all businesses and deduct no more than a total of $139,000 in 2012. Married persons are treated as 1 taxpayer. They are allowed only 1 $139,000 deduction regardless of which spouse placed the property in service. If they file separate returns, each can claim only one-half or $69,500.

INVESTMENT LIMIT

The first-year expense deduction is really designed for small businesses. This is because every dollar of investments in equipment over $560,000 reduces the dollar limit.

Example

In 2012 you buy equipment costing $2,300,000. Your first-year expense deduction is limited to $39,000 ($139,000 − [$660,000 − $560,000]).

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