🏢 Section 179 Deduction OBBBA — CPA Exam REG | Corporate Tax Course

Why It Matters

Section 179 materially affects small- and mid-size firms’ cash flow and investment timing by allowing immediate tax relief for qualifying purchases, so businesses and advisers must consider election strategy, income limits, and interaction with bonus depreciation when planning capital expenditures.

Summary

Professor Farhat explains Section 179, a tax code provision that lets businesses immediately expense qualifying tangible personal property (not most real estate) to reduce taxable income, with a 2026 maximum immediate deduction of $2,560,000. The election is optional, reduces an asset’s depreciable basis before bonus depreciation and MACRS, and is subject to a phase-out when total property placed in service exceeds a statutory threshold and to a business income limitation. Using a multi-year example, he shows how electing Section 179 can reduce basis to zero (creating ordinary gain on a later sale) versus recovering cost over MACRS if not elected. He also reviews Section 179’s historical expansions designed to encourage small- and medium-sized business investment.

Original Description

This lecture explains the Section 179 Deduction OBBBA updates, detailing how the One Big Beautiful Bill Act impacts the immediate expensing limits and phase-out thresholds for qualifying business property. Understanding these critical legislative changes is essential for tax practitioners advising clients on optimal capital asset acquisitions to maximize current-year tax savings. Mastering this specific lecture topic is a requirement for excelling in a Corporate Tax Course and accurately calculating business depreciation scenarios on the CPA Exam REG.

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