The Deduction of Expenses Taken by Business Owners - Essay Example

The deduction of expenses taken by business owners to purchase new equipment is represented by section 179. This is if the purchased equipment is depreciable over a certain period. It is an incentive sometimes used for some small enterprises to expand their businesses (Daily 45). This is with the purchasing of new equipment in the business. Section 179 has its limits on equipment such as cars, machinery used in a business, computers, and office equipment. It is through such methods that a business grows.
Limitations of Section 179
There is a higher tax bill that is acquired if the equipment purchased under section 179 is converted into personal use. If equipment is purchased under the method of section 179, it is highly likely that, during its depreciable life, it can be converted to personal use (Daily 48). However, it may prove costly to do so to the party that intends to do this conversion.
Section 179 also dictates that a taxpayer’s deduction in a year cannot exceed or surpass their income from that active financial year. This means that they are not capable of, or cannot use more than what they may earn in their active conduct of business (Daily 51). All this is within a year. Read More