A Sizeable Drop in Deductions

The big changes here in 2012 are that the amount business owners and farmers can accelerate through Section 179 depreciation in 2012 has dropped down to $125,000 from $500,000 in 2011.  Bonus depreciation has also dropped from 100% down to 50% for 2012.  With those lower thresholds, many farmers and businesses have grown to the size where they will use up that tax deduction early in 2012. 

Leasing can be a key tool to help offset some of those changes as business owners can expense the payments over the term of the agreement, which is likely shorter than traditional depreciation schedules. 

Click here for more information on bonus depreciation and Section 179 deductions.

It is more important than ever to know what your needs are for the coming year and how much you plan to depreciate, as an operating lease might be the best option to help accelerate their deductions in 2012 with the new changes.  

The information provided is a combination of information obtained from the Section 179 and US Internal Revenue Tax Code and should only be used as a guide.  Each company should contact their tax advisor to learn about the specific impact to your business.