Qualifying Property

Generally, the types of business equipment that qualify for this expensing election are the same kind that qualified for the now-defunct Investment Tax Credit. Most movable assets qualify.  Permanent structures do not qualify.  Business vehicles with a gross vehicle weight over 6,000 pounds qualify for the full Sec. 179, while lighter vehicles have a much lower dollar limit. 

One of the most common questions I am still receiving is whether the Section 179 expensing election is only available for the purchase of brand new assets or whether things such as used vehicles qualify. The answer is still the same. The asset just has to be new to you. You can claim the deduction for items purchased from anyone other than yourself or an entity controlled by you, such as a closely held corporation.
 

As of October 22, 2004, the maximum amount that can be claimed for SUVs weighing between 6,000 and 14,000 pounds is $25,000.  The remaining maximum deduction can be used for other kinds of business equipment, including vehicles weighing more than 14,000 pounds.

To be eligible for the Section 179 deduction, the asset must be used at least 50% for business in the first year it is placed in service.  The cost eligible for the deduction is the business usage percentage.

Here are more details on qualifying and nonqualifying property, courtesy of the QuickFinder reference book.

Qualifying Property:
• Tangible personal property (such as machines, equipment,
furniture).
• Certain other tangible property used for specified purposes.
• Single-purpose agricultural or horticultural structures.
• Certain storage facilities.
• Railroad gradings or tunnel bores.

Some examples of qualifying property from the Depreciation QuickFinder Handbook:

•     Airplanes. •     Automobiles. •     Billboards (if movable). •     Cattle—dairy or breeding. •     Citrus trees. •     Computers. •     Emus. •     Fruit trees. •     Gas storage tanks. •     Goats—breeding or milking. •     Greenhouses. •     Helicopters. •     Horses. •     Macadamia trees. •     Machinery and equipment. •     Mink and other fur-bearing animals. •     Office equipment—copiers, typewriters, fax machines, etc. •     Office furniture—desks, chairs, file cabinets, book shelves, etc.

•     Off-the-shelf computer software. •     Oil and gas well and drilling equipment. •     Orchards. •     Ostriches. •     Printing presses. •     Refrigerators. •     Sheep—breeding. •     Signs. •     Sport Utility Vehicles (SUVs). •     Storage facility (e.g., peanut, hay, potato or tobacco). •     Store counters. •     Testing equipment. •     Tractors. •     Trailers (movable). •     Trucks. •     Vineyards. •     Water wells.

 

 

Nonqualifying Property:
• Property held for the production of income
(investment property, most rentals).
• Real property, including buildings and
their structural components, air
conditioning and heating units.
• Property acquired by gift, inheritance
or trade.
• Property purchased from certain related parties.
• Controlled group to controlled group transactions.
• Property used outside the United States.
• Property used in connection with furnishing lodging.
• Property used by tax-exempt organizations and governmental units.
• Property used by foreign persons or entities.
• Property held by an estate or trust.
• Property used by a passive activity.
• Intangible property (including computer software).