DOR: Higher deduction now allowed for business assets

BUSINESSES MAY NOW claim a higher federal and Rhode Island expensing deduction amount for assets placed in service in 2014, according to the state Division of Taxation.
BUSINESSES MAY NOW claim a higher federal and Rhode Island expensing deduction amount for assets placed in service in 2014, according to the state Division of Taxation.

PROVIDENCE – A higher deduction is now being allowed for business assets, according to the state Department of Revenue’s Division of Taxation.

Businesses may now claim a higher federal and Rhode Island expensing deduction amount for assets placed in service in 2014, the state department said.

According to a press release, President Barack Obama signed into law on Dec. 19 changes to the Internal Revenue Code section 179, increasing deduction limits retroactively.

Under the new law, limits are increased for one year, and can be applied for assets placed in service at any point during 2014. Rhode Island law automatically follows the federal increases.

- Advertisement -

“This is good news for businesses,” Rhode Island Tax Administrator David M. Sullivan said.
“Depending on the circumstances, a business can qualify for both a federal and a Rhode Island deduction. The deduction can help the business recover the cost of the asset.”

Under federal and Rhode Island law, the section 179 deduction limit for assets placed in service in 2014 is $500,000 – it had been $25,000. Section 179 covers new and used equipment as well as software.

The overall limit on equipment purchases is $2 million, allowing the company looking to claim the deduction to be able to spend more on purchases before the size of the deduction begins to be reduced on a dollar-for-dollar basis. It had been $200,000.

The section 179 deduction also allows a business to fully charge off the cost of an asset immediately, in the year of acquisition, rather than having to claim the deduction in installments over a number of years, Sullivan said.
“Thanks to the foresight of the General Assembly and Gov. [Lincoln D.] Chafee, businesses are getting some good news this holiday season,” Sullivan said.

Rhode Island law is now linked to federal law when it comes to the section 179 deduction.
“Therefore, when the Section 179 limitations increased for federal tax purposes, they automatically increased for Rhode Island tax purposes, too,” for assets placed in service in 2014, Sullivan said.

A business considering claiming the deduction should check with a tax adviser to see if deduction requirements under the law are met, he said. “If they meet the federal requirements, they’ll automatically qualify for Rhode Island tax purposes,” Sullivan said.

No posts to display