Section 179 Expensing Extension Still Stalled in Senate

Section 179 Expensing Extension Still Stalled in Senate

Section 179's $500,000 deduction is favorable for agricultural producers, but will it be available this year?

Editor's note: Get the latest Section 179 news and updates -  What You Need To Know About Section 179

In April, when the Senate Finance Committee approved a handful of tax extenders that included two-year reinstatement of the $500,000 section 179 expensing level for small businesses, farmers took it as good news.

Later, in June, when the entire House approved permanent restoration of section 179 to the $500,000 level, farmers heard more good news.

But since then, the good news on section 179 has slowed to a trickle and the Senate committee's proposed package has stalled in the full Senate, yet to come up for a vote.

Section 179's $500,000 deduction is favorable for agricultural producers, but will it be available this year?

Without higher expensing levels under section 179, farmers may be slower to make equipment purchases. The provision itself allows farm businesses to take the full depreciation deduction of an item that meets certain specifications – in many cases machinery – in the current tax year, with a maximum deduction of $500,000 and a phase-out threshold of $2 million.

Without an extension, either in the form of a new bill or a provision in a tax package, the 2014 expense election has fallen to $25,000 and the phase-out to $200,000 – quite a drop from the levels business owners have appreciated for several years.

Despite the less than rosy outlook in the Senate, there is talk of reviving section 179 before the end of 2014. Albeit tentative, a Sept. 15 statement from Senate Finance Committee Chairman Ron Wyden urged approval of the committee's EXPIRE Act, which includes the two-year 179 extension, for the sake of business planning.

"Because Congress has not renewed increased expensing limits under Section 179, industrious Oregon wine makers ... may be forced to choose between new equipment and hiring new employees," Wyden noted.

Meanwhile, permanent Section 179 expensing at the $500,000 level also turned up in an omnibus jobs and economic growth package drafted by House Republicans this week. On Sept. 18, it was passed 253-163.

Interested in more Section 179 background? Here's a recap of the year's Farm Progress coverage on Section 179 and bonus depreciation, plus a few Section 179 resources for agricultural producers.

Bye Bye Hefty Write-off? (January, 2014)
Why You Should Care About Depreciation Deduction: Section 179 (March, 2014)
Section 179, Renewables Tax Extenders Approved in Senate Committee (April, 2014)
House Passes Tax Extenders Legislation (June, 2014)
Making the Case for Section 179 Tax Break (June, 2014)
Section 179 Tax Benefit May Not Return This Year (July, 2014)

Section179.org
IRS.gov – Section 179 Deduction

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