Important Information about the IRS Section 179 Deduction

by | May 20, 2013 | money-and-finance

Dealing with the IRS can be a frightening experience for some businesses. Because of the amount of fraud they deal with on a yearly basis, they often keep a close eye on the deduction businesses take to ensure no one takes advantage of the system. With the IRS Section 179 deduction that was put in place in 2005, it is important to know how the IRS views these deductions to ensure you take advantage of them properly.

One-Time Deduction

When it comes to most business-related deduction, especially in terms of purchasing items, such as a new HVAC system or lighting, is you must depreciate the value and deduct a percentage every year for a certain number of years. With the Section 179 deduction, this does not apply. You will be able to deduct the entire cost on your first year of use instead of having to spread it out. This can be a great relief to your business, especially if you didn’t finance the changes.


The one area of the IRS Section 179 deduction you must realize is there are penalties you need to be aware of. If your deductions are related to HVAC improvements, lighting changes or building envelope improvements, you are less likely to need to worry about this. However, it is critical to know that if you do not keep using the item you are deducting for three years, you will need to pay back whatever depreciated value is left. This includes selling the business building before the three years is over.

Protect Yourself

Going up against the IRS alone is not something that is advised, especially when it comes to these important business deductions. Incorrectly claiming something on your taxes can have a detrimental impact on your business for years to come. This is why it is so important to protect yourself with a firm that is knowledgeable on the Section 179 deduction to ensure you don’t make any mistakes.

Understanding as much as you can about the IRS Section 179 deduction will ensure you use it properly to benefit your business and avoid putting up any red flags. For starters, this is a one-time deduction that will help your business make up for the cost of the renovations and any purchases quickly. However, you will need to repay a percentage of that deduction if you stop using the items before the three years are over. This is why it is important to protect yourself with a quality firm to help you take the deduction properly.


To learn more about the IRS Section 179 deduction and how it works, visit the Walker Reid Strategies website or call 1-800-662-179D.

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