Roy Barron

Write-off Full Purchase Price in 2020

2020 Section 179 Overview

What is the Section 179 Deduction?

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased
or financed during the tax year. In 2020, the deduction limit on equipment is $1,040,000. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

In 2020, the spending cap on equipment purchases is $2,590,000 before the section 179 Deduction begins to be reduced on a dollar-for-dollar basis. How Section 179 works…

How Section 179 works…

When your business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example). Now, while it’s true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting over the next few years. That’s the whole purpose behind Section 179 — to motivate the American economy (and your business) to move in a positive direction. For most small businesses, the entire cost can be written-off
on the 2020 tax return (up to $1,040,000).

The information above was collected from Based on the material, this could assist your business in making a strategic investment before the end of the year; however, consulting with your tax advisor to determine if this is a favorable business opportunity is strongly recommended. For more information and how this tax code directly applies to you, please consult with your tax advisor to confirm how you may benefit from this tax incentive

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