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Tax Articles

Depreciation and Section 179 Deduction

Increased section 179 limits. The maximum section 179 deduction you can elect for qualified section 179 property you placed in service in tax years that begin in 2008, has increased to $250,000 ($285,000 for qualified enterprise zone property and qualified renewal community property). This limit is reduced by the amount by which the cost of section 179 property placed in service in the tax year exceeds $800,000.

For qualified section 179 Gulf Opportunity (GO) Zone property placed in service in certain counties and parishes of the GO Zone, the maximum deduction is higher than the deduction for most other section 179 property.

Depreciation limits on business vehicles.

The total depreciation deduction (including the section 179 deduction) you can take for a passenger automobile (that is not a truck or a van) you use in your business and first placed in service in 2008 is $2,960 ($10,960 for automobiles for which the special depreciation allowances applies). The maximum deduction you can take for a truck or a van you use in your business and first placed in service in 2008 is $3,160 ($11,160 for trucks or vans for which the special depreciation allowance applies).

New Late Filing Penalty for S-Corporations and LLCs

The IRS has increased its late filing penalty $85 per month, per partner on late filed returns for S-Corporations, Partnerships and LLCs.  

Any partnership required to file a return for any year, which failed to file on time (including extensions), is liable for a monthly penalty equal to $85 times the number of persons who were partners during any part of the tax year, for each month or fraction of a month for which the failure continued.

For example, a partnership that had two partners and was five months late in filing their return would be subject to a penalty of $850.

This penalty also applies to S Corporations.
 
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