J.K. Lasser's Small Business Taxes 2023

CHAPTER 14First‐Year Expensing, Depreciation, Amortization, and Depletion

• Section 179 Expensing
• Other Expensing Opportunities
• Bonus Depreciation
• General Rules for Depreciation
• Modified Accelerated Cost Recovery System
• Depreciation Methods
• Limitations on Listed Property
• De Minimis Safe Harbor Rule
• Putting Personal Property to Business Use
• Amortization
• Depletion

Alert

At the time this book was published, Congress was considering tax changes that could affect 2022 tax returns and planning for 2023. Check the online Supplement in February 2023 at www.jklasser.com or www.BigIdeasForSmallBusiness.com to see what changes have been enacted and when they become effective.

There are a number of ways in which you can write off the cost of machinery and equipment. The method you use depends on your situation. And there are special write‐off rules for realty and intangible property, and other types of property.

First‐year expensing, which is also called the Section 179 deduction after the section in the Tax Code that created it, is a write‐off allowed for the purchase of equipment used in your business. This deduction takes the place of depreciation—the amount expensed is not depreciated. For example, if you buy a 3‐D printer for your business for $8,100, you can opt to deduct its cost in full in the year you place the printer into service. If you don't make this election and no other write‐off option applies, you must write off the cost using depreciation over a number ...