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2005 Tax Brief
By Kathleen M. Donaghy, Best Software, Inc.
Extension
of Increase in Section 179 Expense
The "American Jobs Creation Act of 2004" insured that
2005 and 2006 will be good years to shop around for additional furniture,
fixtures and equipment or to replace existing old fixed assets.
The Section 179 expense increased amounts (indexed for inflation)
have been extended for an additional two years through 2007. The
Section 179 expense limit for tax years 2005-2007 is $105,000 with
the increased phase-out for property placed in service being $420,000.
Section 179 expense is scheduled to drop down to $25,000 in 2008.
Luxury Auto and Truck Limits for 2005
When the CPI Indexes were released on November 17, 2004, the luxury
auto and truck depreciation limits for 2005 were calculated by the
FAS Design team. As of this publication date, these limits have
not been officially released to the public but a special preview
has been provided below. With the exception of the decrease in Year
2 and bonus depreciation ending for vehicles placed in service after
12/31/04 as noted below, the limits have stayed the same as the
2004 limits:
Luxury Autos
| Year Placed in Service | Year 1 | Year 2 | Year 3 | Year 4+ |
| 2004 | $2,960* | $4,900 | $2,850 | $1,675 |
| 2005 | $2,960 | $4,700 | $2,850 | $1,675 |
| Year Placed in Service | Year 1 | Year 2 | Year 3 | Year 4+ |
| 2004 | $3,260* | $5,300 | $3,150 | $1,875 |
| 2005 | $3,260 | $5,200 | $3,150 | $1,875 |
*The Jobs and Growth Tax Relief Act increased the luxury auto limitation by $7,650 for vehicles purchased after May 5, 2003 and before January 1, 2005 for which the 50% or 30% additional depreciation deduction was claimed.The first year depreciation limit listed in the tables above is the allowable combination of depreciation and Section 179 expense. These amounts must be reduced if the tax year is less than 12 months or the business use is less than 100%.
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