Taxpayers may elect to expense certain business assets purchased during the taxable year. The Tax Cuts and Jobs Act (TCJA) increased the benefits, making changes to IRC sec. 179. For tax year 2018, Massachusetts follows 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 $1 million ceiling is reduced by $1 for each dollar of investment above $2.5 million. Any amount of the deduction that exceeds net income may be carried forward or may be depreciated according to MACRS as described in item 2.305. The annual deduction of $1 million and the $2.5 million limitation 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
Expense Deduction for Excess First-Year Business Assets
Taxpayers may elect to expense certain business assets purchased during the taxable year. The Tax Cuts and Jobs Act (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 follows 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 $1 million ceiling is reduced by $1 for each dollar of investment above $2.5 million. Any amount of the deduction that exceeds net income may be carried forward or 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 and the $2.5 million limitation 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>
66.5
31.1
11.1
8.2
7.4
