IRS makes one of two changes for small businesses, farms and ranches
The Internal Revenue Service has agreed to a change that will make life a little easier for many small businesses and family farms and ranches. Attention shifts now to another proposed tax law change that agriculturalists, farm equipment manufact...
The Internal Revenue Service has agreed to a change that will make life a little easier for many small businesses and family farms and ranches. Attention shifts now to another proposed tax law change that agriculturalists, farm equipment manufacturers and ag groups support.
The IRS is raising the "safe harbor threshold" for expensing the purchase, acquisition or improvement of tangible property from $500 to $2,500. That will simplify record-keeping requirements for taxpayers who made purchases of items such as smart phones.
The change takes effect Jan. 1, 2016.
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Both North Dakota senators - Republican John Hoeven and Democrat Heidi Heitkamp - say they worked to have the threshold raised from $500 to $2,500 and that the revision will benefit taxpayers in the state.
The question now is what will become of the $500,000 limitation for Section 179 expensing.
Section 179 of the U.S. Internal Revenue Code had allowed farmers and other businesspeople to deduct up to $500,000 of new or used equipment purchased during the tax year. As things stand now, however, the limit for the 2015 tax year will be limited to $25,000.
Farmers and ag groups have pushed to restore the $500,000 limitation. There's been speculation that the $500,000 limitation - which is supported by business groups outside agriculture, as well - will be restored or extended late in the year.
“I’m optimistic that we’ll get something done by the end of the year,” Hoeven told Agweek Thursday.
But he’s uncertain whether the higher limitation will be restored permanently, an option he supports, or just for two years.
Heitkamp said this in a statement sent to Agweek:
“We need to ease harsh tax burdens on North Dakota’s hardworking farmers and ranchers. As we finish the year, I’m hopeful that Congress will recognize what I’ve long heard from our state’s producers and small business owners – that we need to extend the Section 179 expensing and depreciation provision to provide certainty for farmers and businesses,” she said.