Many of you will have the opportunity to consider purchasing some sort of capital equipment or machinery that will be used in connection with your employment and/or trade or business. The decision to make such a purchase of equipment before the end of the year invokes the previously mentioned strategies of either manipulation of income and expenses and/or the bunching of deductions.
If you decide to purchase something at the end of the year, you can elect to claim a full year’s worth of depreciation, or in the alternative, elect to simply expense the item all together under IRS Code Section 179. An important consideration that should be taken into account in implementing one of these strategies is whether your income this year is going to be higher than next year and what the net benefit from such an expenditure will be at your highest marginal tax bracket.
By: Bruce M. Fogel, Esquire
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