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While President Trump’s new administration works vigorously to unravel many of the programs put in place by President Obama, the Protecting Americans from Tax Hikes (PATH) Act of 2015 remains intact. In fact, the IRS only recently released guidance for those interested in taking advantage of laws like Section 179 for real estate improvements (see Revenue Procedure 2017-33).

The PATH Act modifies Section 179 by making permanent the treatment of qualified real property as Section 179 property for small businesses. This allows certain small business commercial property to “expense” up to $500,000 of qualifying property and provides a 15-year depreciation period for the rest. Prior limitations were $250,000 and a traditional 39-year depreciation schedule.

A previous blog post lists property that would qualify. It includes specific equipment and vehicles, office furniture and computers, and specific structures like storage facilities. For the first time, certain air conditioning and heating units may be eligible for Section 179 deductions. The PATH Act also makes permanent the inclusion of certain computer software as possible Section 179 property.  Farmers and ranchers should take note that the new definitions also include plants and grafted plants (specifically trees and vines that bear fruits or nuts) planted after 2015.

While the PATH Act and recent IRS guidance are meant to help simplify and improve the process of taking Section 179 deductions for small businesses, they’ve also introduced some surprising complications. For specific questions on how these tax breaks could benefit your business, contact us.Image Copyright: mavoimage / 123RF Stock Photo

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