Business FinancesQuestion 1168 of 1605
Under a Section 179 election, a small contractor may be able to:
a.Avoid paying any income tax permanently
b.Depreciate land over 5 years
c.Skip depreciation records entirely
d.Deduct the full cost of qualifying equipment in the year placed in service, up to a limit
Explanation
Section 179 lets a business expense (deduct) the full cost of qualifying equipment in the year it is placed in service, up to an annual dollar limit, rather than depreciating it over several years. It accelerates the tax benefit; land is never depreciable.
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Related questions on this topic
- Depreciation is best described as:
- A $50,000 piece of equipment has an estimated salvage value of $5,000 and a useful life of 9 years. What is the annual straight-line depreciation?
- Which of the following would typically be DEPRECIATED rather than expensed in the year purchased?
- For how long should a contractor generally retain business and tax records to support filed returns and defend against audits?
- Accurate job-cost records are important primarily because they:
- Which record-keeping method records revenue when it is EARNED and expenses when they are INCURRED, regardless of when cash changes hands?
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)