Section 179  

Related Ads

Need Professional Help? Talk to a Lawyer

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

searchbox small

Section 179 of the Internal Revenue Code allows a business to deduct the costs of long-term assets in the year they are purchased. The amount of the deduction cannot be more than your total taxable income from the active conduct of any trade or business (that includes employee and spouse's wages, sole proprietorships, partnerships, and S corporations). Unless you have other sources of eBay business income, you can use your Section 179 deduction to create a taxable loss for your business.

Any unused deduction under Section 179 may be carried over to a future year, when business is better and there is more income to cover the deduction. Assuming your eBay business is doing extremely well, you may deduct up to a limit of $500,000 in costs for capital assets. The $500,000 annual limit is in effect for 2014, 2013, and 2012. It is scheduled to go down to $25,000 in 2015.

Section 179 only applies to the purchase of tangible personal property — you can’t use it to deduct the cost of land, buildings, or intellectual property such as patents and copyrights. To take the deduction, you must use the item for business more than half of the time in the year you buy it. This means that if you buy an item (such as a computer or desk) for personal use and then start using it in your business more than one year later, you cannot deduct it under Section 179.

It also means that if you use an item at least half of the time for personal (nonbusiness) purposes, you can’t take the deduction. If you use the item more than half of the time for business, you may deduct only a percentage of what you paid based on the time you use it for business. For example, if you paid $2,000 for a computer that you use 75% of the time for business, you may deduct $1,500 of the total cost.

Get Informed

Empower yourself with our plain-English information

Do It Yourself

Handle routine tasks with our products

Find a Lawyer

Connect with a local lawyer who meets your needs

The fastest, easiest way to find, choose, and connect to business lawyers

Related Ads