Jack Selzer, tax attorney for Seigfreid, Bingham, and legal counsel to NAEDA, wrote an article regarding Section 179 depreciation for the October issue of the NAEDA magazine. Following is an excerpt from his OMEDA "Fast Facts' article that recaps the current tax law for Section 179 expenditures as well as captures the history of its revisions from previous legislative changes.

Basic changes in tax depreciation/expense rules reduce the “extra” amounts that can be written off in 2012 to reduce taxes. Here are two key provisions that can impact salespeople making new and used equipment sales before year-end. Section 179 expense deduction for new and used equipment. The Section 179 deduction for 2012 is $139,000 and the phase-out threshold is $560,000. Here is an example how this works. If a customer were to buy new and/or used equipment of $600,000 during 2012, the allowable Section 179 expense deduction would be $99,000 computed as follows: $600,000 of purchases minus the $560,000 threshold amount equals $40,000 reduction of the $139,000 expense allowance to $99,000 for the Section 179 expense deduction in 2012. Bonus depreciation for new equipment. Last year you could expense 100% of the purchase price of new equipment. In 2012, the extra bonus depreciation is limited to 50% of the purchase price of new equipment. Example: If a customer buys new equipment in 2012 for $600,000, he can take an extra $300,000 bonus depreciation deduction in 2012. After Dec. 31, 2012, the bonus depreciation is scheduled to vanish.

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