When you buy new equipment for your business—whether it’s a computer, a delivery van, a manufacturing machine, or even a piece of furniture—those items are considered capital assets. The IRS allows you to recover the cost of these assets over time through depreciation, but under certain conditions you can write off the entire purchase price in the first year. This can provide a sizable tax deduction and improve your cash flow. The process involves a few key rules, forms, and best‑practice steps. Below is an easy-to-follow guide to claim full write‑offs on business equipment.
Understand the two main depreciation tools that enable a full first‑year write‑off: Section 179 and Bonus Depreciation. • Section 179 lets you elect to expense the entire cost of qualifying equipment, up to a dollar threshold that is adjusted annually for inflation. The threshold is higher for small businesses and declines if your total purchases exceed a certain limit in a calendar year. • Bonus Depreciation applies to assets eligible for the 100 % first‑year deduction and is available for all remaining depreciable property after the Section 179 election. Its rate has varied over the last decade, but as of 2024 it is again 100 % for new and used property acquired after 2022. Both methods are available only for property that is placed in service during the tax year and that is not part of a lease or a rental agreement.
Confirm that the equipment qualifies. • The asset must be tangible personal property with a useful life of 20 years or less. • Items like land, real estate, and some furniture types do not qualify for the full write‑off. • If the equipment is used in a trade or business, it must be employed at least 50 % for business purposes to be fully deductible. • For used equipment, you must be the original owner or have a title that is not subject to a lease.
Collect your documentation before buying. • Store the invoice, receipt, or contract that records the purchase price, acquisition date, and equipment category. • Log the serial number, model, and any relevant identifying details. • If you are paying in installments, maintain a schedule of payments and the date each payment was made. • For leased equipment, you need the lease agreement and evidence that you have the right to claim the deduction under the lease terms.
Calculate the total amount you can expense. • Total the cost of all equipment you plan to claim in the current year. • If the total exceeds the Section 179 limit, you may still claim the maximum Section 179 amount and then apply Bonus Depreciation to the remainder. • If you exceed the overall Section 179 cap (the "phase‑out" threshold), the excess amount is not deductible under Section 179 and must be depreciated over its useful life.
Submit the election on your tax return. • For most small‑to‑mid‑size businesses filing a Form 1120 or 1120‑S, the election is made on Form 4562, Depreciation and Amortization. • The form asks you to list each item, 節税 商品 its business use percentage, cost, and the amount claimed under Section 179. • If you elect Bonus Depreciation, you also list the remaining cost and tick the relevant box on Form 4562. • Attach a copy of the purchase invoice (or a summary if you have many items) to support your deduction.
Implement the half‑year convention. • The IRS assumes that any qualifying property placed in service during a tax year is placed in service halfway through that year. • This convention effectively halves the depreciation you can claim in the first year for assets that do not qualify for a full write‑off. • Nonetheless, if you apply Section 179 or Bonus Depreciation, the half‑year convention is irrelevant as you expense the full cost in the first year.
Keep a record for at least seven years. • The IRS may audit your return and ask for proof of the equipment’s purchase and business use. • A detailed file that includes the invoice, a log of business use, and the original cost basis will protect you from penalties.
Pay attention to special situations. • Home office equipment: If some of your equipment is used in a home office, you may need to divide the deduction between business and personal use. • Section 179 on leased equipment: If you lease equipment, the lease must be structured such that you effectively owns the asset (e.g., a lease‑to‑own arrangement). • International vendors: If you purchase equipment from a foreign supplier, you must account for import duties and confirm the purchase price is reported correctly.
Sample scenario. • Your company buys a new delivery van for $45,000 and a computer system for $3,000 in March. • The total purchase amount is $48,000, which falls below the 2024 Section 179 limit of $1,160,000. • You elect to expense the entire $48,000 under Section 179 on Form 4562. • Because the entire amount is expensed, you do not need to claim Bonus Depreciation. • You keep the invoice and a log showing the van is used 100 % for deliveries, thereby validating the deduction.
Checklist before filing. • Ensure that each item truly qualifies for the full write‑off. • Ensure the business use percentage is at least 50 %. • Double‑check that the total Section 179 amount does not exceed the threshold or the phase‑out limit. • Attach all supporting documents. • File Form 4562 with your corporate return and retain copies for your records.

By adhering to these steps, you can boost your tax savings and preserve healthy cash flow. Keep organized, maintain meticulous records, and seek a tax professional if complex ownership or leasing arrangements arise. The full write‑off is a potent tool—properly applied, it can convert a sizeable equipment purchase into a major tax deduction.