Which statement about IRS Section 179 is true?

Which statement about IRS Section 179 is true?

• A. Allows deduction only for new equipment.
• B. Applied only to intangible assets.
• C. Allows immediate deductions for certain asset purchases in the year of purchase.
• D. Has never changed over the years.

Answer: (C)

The idea being tested is that Section 179 lets a business deduct the cost of qualifying property in the year it’s placed in service, rather than depreciating it over multiple years. That’s exactly what the statement expresses: you can take an immediate deduction for certain asset purchases in the year you buy and start using them, subject to limits. This deduction applies to tangible personal property used in business, such as equipment and machinery, and it can include used items as long as they meet the rules. It’s not for intangible assets. It also depends on annual dollar caps and the business’s income, and the specifics have changed with tax law over the years. So, choosing the option that describes an immediate deduction in the year of purchase correctly captures how Section 179 works.

The idea being tested is that Section 179 lets a business deduct the cost of qualifying property in the year it’s placed in service, rather than depreciating it over multiple years. That’s exactly what the statement expresses: you can take an immediate deduction for certain asset purchases in the year you buy and start using them, subject to limits.

This deduction applies to tangible personal property used in business, such as equipment and machinery, and it can include used items as long as they meet the rules. It’s not for intangible assets. It also depends on annual dollar caps and the business’s income, and the specifics have changed with tax law over the years.

So, choosing the option that describes an immediate deduction in the year of purchase correctly captures how Section 179 works.