Section 179 and Bonus Depreciation Reminders for 2017

As a friendly tax reminder, any banks looking for tax relief and plan to capture Section 179/Bonus Depreciation must have their new and used equipment in place by December 31, 2017. Under Section 179, banks may elect to deduct as an expense the cost of any qualified (new or used) tangible or real property placed in service during the tax year. In 2017, banks with less than approximately $2,000,000 in qualifying purchases are allowed to deduct up to $510,000 from their current year’s taxable income. Purchases in excess of $2,000,000 will begin to have the Section 179 deduction phased out. 

In addition, assets that a bank does not expense under Section 179 are still eligible for the Bonus Depreciation deduction. The Bonus Depreciation rates are currently set to begin phasing out after 2017. However, in 2017 banks are eligible to depreciate 50% of the total cost of any qualified assets that are placed into service. For 2018, this bonus rate decreases to 40% of the eligible asset costs, and in 2019 this decreases to 30%. Under the current tax rules bonus depreciation will be fully phased out after 2019.

Both Section 179 and Bonus Depreciation have many rules surrounding the types of assets that will qualify. If you have any questions regarding these assets and purchases in 2017, feel free to contact Ryan Pospeck at 720-889-5696.