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Section 179 is a part of the Internal Revenue Code that allows businesses to deduct the full purchase price of qualifying property, equipment, and software in the year it is placed into service, rather than depreciating the cost over several years. This deduction aims to incentivize businesses to invest in assets that may help increase productivity and growth. To qualify for Section 179 deductions, the property or equipment must meet the following criteria: 1. Eligible property: The property must be tangible, depreciable, personal property primarily used in the active conduct of a trade or business. The property may be new or used, but it must be purchased (not leased or inherited) during the tax year in which the deduction is being claimed. 2. Use in active trade or business: The property must be used more than 50% by the business for business purposes. If the property is used for both personal and business purposes, only the percentage used for business purposes is eligible for Section 179 deduction. 3. Types of qualifying property: Some examples of qualifying property include machinery, office equipment, furniture, computers, software, vehicles (subject to certain weight restrictions), and certain improvements made to nonresidential real property, such as roofs, HVAC systems, fire protection systems, and security systems. 4. Purchase and placed in service date: The property must be acquired and placed in service during the tax year for which the Section 179 deduction is being claimed. Placing property in service generally means that the property is in a condition or state of readiness for its intended purpose. 5. Limits: For tax year 2022, the maximum Section 179 deduction is $1,080,000. The deduction begins to phase out when a business's total qualifying property purchases for the year exceed $2,700,000. Note that these limits may be subject to inflation adjustments in future years. 6. Taxable income limitation: The Section 179 deduction cannot exceed the taxpayer's aggregate taxable income derived from their active trade or business. However, any unused deduction can be carried forward to future years. Make sure to consult a tax professional for specific determinations on your business's eligibility for Section 179 deductions, as well as tax planning strategies related to capital investments.