Taxpayers may elect to expense certain business assets purchased during the taxable year. The TCJA increased the benefits, making changes to IRC sec. 179. For tax year 2018, Massachusetts adopted the increased federal amounts provided by IRC sec. 179. The total deduction cannot exceed $1 million; for taxpayers whose investment in eligible assets exceeds $2.5 million in the year, the $500,000 ceiling is reduced by $1 for each dollar of investment above $2.5 million. Any remaining cost may be depreciated according to MACRS as described in item 2.305. The annual deduction of $1 million available for 2018 will be indexed to inflation.
In addition, there were also changes to IRC § 179 to allow improvements to the interior of any nonresidential real property, as well as roofs, heating, ventilation, and air-conditioning property, fire protection and alarm systems, and security systems installed on such property to qualify for expensing. The exclusion from expensing for tangible personal property used in connection with lodging facilities (such as residential rental property) has also been eliminated.
The immediate deduction constitutes a tax expenditure, resulting in a deferral of tax or an interest-free loan.
Origin: IRC, § 179
Corporate Excise Tax
Accelerated Deductions from Gross Income
2.306
Deduction for Excess First-Year Depreciation
Taxpayers may elect to expense certain business assets purchased during the taxable year. The TCJA increased the benefits, making changes to <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank"><a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank">IRC sec. 179</a></a>. For tax year 2018, Massachusetts adopted the increased federal amounts provided by <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank"><a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank">IRC sec. 179</a></a>. The total deduction cannot exceed $1 million; for taxpayers whose investment in eligible assets exceeds $2.5 million in the year, the $500,000 ceiling is reduced by $1 for each dollar of investment above $2.5 million. Any remaining cost may be depreciated according to MACRS as described in item <a href="/tax-expenditure-budget/corporate-excise-tax/accelerated-deductions-from-gross-income/2-305">2.305</a>. The annual deduction of $1 million available for 2018 will be indexed to inflation. <BR><BR>In addition, there were also changes to <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank">IRC § 179</a> to allow improvements to the interior of any nonresidential real property, as well as roofs, heating, ventilation, and air-conditioning property, fire protection and alarm systems, and security systems installed on such property to qualify for expensing. The exclusion from expensing for tangible personal property used in connection with lodging facilities (such as residential rental property) has also been eliminated.<BR><BR>The immediate deduction constitutes a tax expenditure, resulting in a deferral of tax or an interest-free loan.
<a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank">IRC, § 179</a>
112.1
66.9
31.3
16.6
14.2
