Section 179 Business Taxes Flashcards
What is Section 179 of the IRS tax code?
A tax deduction that allows businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year.
True or False: Section 179 can only be applied to new equipment.
False
What is the maximum deduction limit for Section 179 in 2023?
The maximum deduction limit for Section 179 in 2023 is $1,160,000.
Fill in the blank: Section 179 is designed to encourage businesses to invest in _______.
capital assets
Which types of property qualify for Section 179 deductions?
Tangible personal property, certain software, and qualified real property.
Multiple Choice: Which of the following is NOT eligible for Section 179 deduction? A) Office furniture B) Vehicles over 6,000 pounds C) Land D) Computers
C) Land
What is the phase-out threshold for Section 179 in 2023?
The phase-out threshold is $2,890,000.
True or False: Businesses can carry over unused Section 179 deduction to future years.
True
What is the purpose of the Section 179 deduction?
To incentivize small businesses to purchase equipment and invest in growth.
Short Answer: How does Section 179 benefit small businesses?
It reduces taxable income and allows for immediate expense recognition of equipment purchases.
Fill in the blank: Section 179 applies to businesses that purchase equipment for _______ use.
business
Multiple Choice: Which of the following is a benefit of Section 179? A) Reduces taxable income B) Increases tax liability C) Delays depreciation D) None of the above
A) Reduces taxable income
True or False: Section 179 deductions can be claimed by both corporations and sole proprietorships.
True
What is the impact of Section 179 on cash flow for businesses?
It improves cash flow by allowing businesses to write off equipment costs in the year of purchase.
Short Answer: Can Section 179 be used in conjunction with bonus depreciation?
Yes, businesses can use both Section 179 and bonus depreciation.
Fill in the blank: The Section 179 deduction must be elected on _______.
Form 4562
Multiple Choice: Which of the following would likely NOT be considered a qualifying property for Section 179? A) Machinery B) Inventory C) Office equipment D) Computers
B) Inventory
True or False: The Section 179 deduction can only be used by businesses with a profit.
True
What happens if a business exceeds the Section 179 deduction limit?
The excess amount is not lost; it can be carried over to the next tax year.
Short Answer: How does Section 179 affect tax planning for businesses?
It allows businesses to plan for equipment purchases strategically to maximize tax benefits.
Fill in the blank: The Section 179 deduction is available for both _______ and _______ businesses.
small; large
Multiple Choice: What is one requirement for property to qualify for Section 179? A) Must be purchased B) Must be rented C) Must be used exclusively for personal use D) Must be a gift
A) Must be purchased
True or False: The Section 179 limit is the same for all types of businesses.
True
What is the significance of the 2020 tax law changes regarding Section 179?
It expanded the deduction limits and eligibility for certain types of property.
Short Answer: Can vehicles be eligible for Section 179 deduction?
Yes, but there are specific rules and limits based on vehicle weight.
Fill in the blank: To qualify for Section 179, property must be used more than _______ percent for business purposes.
50
