When you purchase big-ticket items such as computers, furniture, and equipment, named as capital expenditures, usually, these items last more than one year, so we allocate the cost of them across the years of their use. This process is known as depreciation.
There are special rules for tax depreciation. If you know these rules, you can effectively expense significant purchases in one year, which can be an effective tax strategy. For 2014, this is accomplished by taking advantage of Section 179 deductions.
Section 179 has several rules that you must follow to take advantage of it. You can only use it on certain purchased items such as machinery, equipment, furniture, fixtures, and signs. You cannot take it on buildings, their structural components, or land. You must purchase the items for use in business, and if they are used for both business and personal, they must be at least 50% business use to qualify. Finally, there is a limit on the deduction currently in place for 2014 of $25,000.
