Tangible Asset Expensing Limit Set to Expire

Many folks have come to know and love the Internal Revenue Code’s “Section 179” deduction.  Under this rule, tangible personal property which would otherwise be capitalized and depreciated over several years can be written off in full in the year the property is purchased and placed in service.

And indeed, the deduction has been quite generous in recent years – allowing taxpayers to deduct expenditures of as much as $500,000 in the acquisition year.  But unless Congress takes action to retroactively restore this generous allowance to property purchases after December 31, 2014, the limit drops from $500,000 to $25,000!  So if you bought that fancy machine in January or later of this year, get on the horn to your Congressman and insist that he and his cronies extend this provision, lest you be stuck with only a measly depreciation deduction for this year’s expenditure.

And all of you California taxpayers, out there, who had claimed unreimbursed employee business expense deduction in 2011 and 2012 just might soon receive a nastygram from the California Franchise Tax Board, who recently announced they are going to increase audit activity in this area because they “Noticed a large number of taxpayers who claim unreimbursed employee business expenses…..that appear questionable.”

So, if you’re one of the unlucky targets, get ready to produce:

  • A copy of your employer’s policy or contract on expense reimbursements, and
  • Employment information, such as:
    • Employer name and address,
    • Info regarding your union, if you’re a member of one,
    • A detailed schedule of each unreimbursed employee expense, and
    • A detailed transportation log if you claimed business mileage expenses.

And finally, this week, from our “confused taxpayer” department comes word

from the California Board of Equalization that a distribution received by a California resident from an IRA was, indeed, subject to California tax, even though the IRA had been previously converted from a pension plan offered by the taxpayer’s former Canadian employer.

Seems pretty obvious, doesn’t it?

CONSULT YOUR TAX ADVISOR  – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He may be reached at 831-7288, and welcomes comments at [email protected].

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