Under the Internal Revenue Code (the "Code"), businesses may recover the cost of durable business assets only by capitalizing the cost and claiming depreciation deductions over a period of years. The Code adopts different depreciation schedules for specified classes of assets. Massachusetts follows the federal depreciation rules, with modifications. Code § 179 allows federal taxpayers to elect to claim an immediate expense deduction in the tax year during which the asset was first placed in service. Due to its conformity to the Code for determining business expense deductions, Massachusetts allows the Code § 179 deduction in the same amount as it is allowed for federal tax purposes. The tax expenditure is a result of such conformity. The immediate deduction of the cost of business assets constitutes a tax expenditure because it results in a deferral of tax.
Origin: IRC § 179
Personal Income Tax
Accelerated Deductions from Gross Income
1.305
Expense Deduction for First-Year Business Assets
<BR>Under the Internal Revenue Code (the "Code"), businesses may recover the cost of durable business assets only by capitalizing the cost and claiming depreciation deductions over a period of years. The Code adopts different depreciation schedules for specified classes of assets. Massachusetts follows the federal depreciation rules, with modifications. Code § 179 allows federal taxpayers to elect to claim an immediate expense deduction in the tax year during which the asset was first placed in service. Due to its conformity to the Code for determining business expense deductions, Massachusetts allows the Code § 179 deduction in the same amount as it is allowed for federal tax purposes. The tax expenditure is a result of such conformity. The immediate deduction of the cost of business assets constitutes a tax expenditure because it results in a deferral of tax.
<a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000179----000-.html" target="_blank">IRC § 179</a>
46.7
37.8
33.0
29.9
40.3
