Comprehensive Business Services

Sect. 2021: Increased expensing limitations for
2010 and 2011; certain real property treated as Code section 179 property.

An expense deduction is allowed for businesses which choose to treat the cost
of certain qualified property, called section 179 property, as an expense rather
than a capital expenditure. For qualifying property placed in service during the
taxable years 2010 and 2011, the new law increases both the maximum amount of
the deductible expense under IRC Section 179, as well as the statutory phase-out
amount. The provision also expands the definition of IRC Section 179 property to
include the following types of real property: qualified leasehold improvement
property, qualified restaurant property and qualified retail improvement
property.

Section 402, Temporary Extension of Increased Small Business Expensing, of
the Tax Relief Act of 2010, further amended IRC Section 179 for tax years 2012
and 2013. If this election is chosen, it is made in Part 1 on Form 4562, Depreciation and Amortization
(PDF), which must be attached to the taxpayer’s original tax return. The instructions (PDF) for Form 4562 contain
information on how to complete Part I, Election To Expense Certain Property
Under Section 179. Further guidance on Section 2021 is available in Rev. Proc. 2010-47.