Section 179 IRS Tax Deductions

There is an important tax opportunity that is currently available that will be going away after December 31, 2010. This is an opportunity that all shippers may qualify for if they act now.

Normally all off-the-shelf software purchases, like Harvey Software’s CPS shipping software. must be depreciated over a 36-month period, but there are some important exceptions that end December 31, 2010. Off-the-shelf computer software purchased from January 1, 2003 to December 31, 2010 is eligible for an IRS Section 179 deduction, which means that 100% of the cost of software can be deducted in the year purchased. Starting in 2011, you will no longer be able to use Section 179 deductions for off-the-shelf software.

Most off-the-shelf shipping software meets all the basic requirements for this deduction as it is readily available for purchase by the general public, it is subject to a nonexclusive license, and it has not been substantially modified.

This means that you could purchase new shipping software now and then expense 100% of that cost this year. Naturally, as with any tax deduction, you will need to consult your tax advisors to know how it fits your company.

Below are some Q&A type details we understand about IRS Section 179 Deductions:

What is the Section 179 Deduction?

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct 100% of the purchase price from your gross income. It's an incentive created by the U.S. Government to encourage businesses to buy equipment and invest in their businesses.

What Software Qualifies?

For basic eligibility, the software must meet all of the following general specifications:

1. The software must be purchased outright by the company that uses it.
2. The software must be used in your business or income-producing activity.
3. The software must have a determinable useful life.
4. The software must be expected to last more than one year.

Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction.

To learn more about purchasing CPS visit http://www.HarveySoft.com or call 800-231-0296 today.