The IRS has issued Revenue Procedure 2007-60 which corrects inflation adjusted amounts applying to taxpayers who elect to expense certain depreciable assets under Section 179 of the Internal Revenue Code.
Previous law entitled taxpayers to take a current year expense deduction for the cost of Section 179 property up to $100,000, and that $100,000 had to be reduced (but not below zero) by the amount by which the cost of Section 179 property acquired in the current year exceeded $400,000. These amounts applied to tax years 2003 through 2009 and were subject to annual inflation adjustments.
With the passage of the Small Business and Work Opportunity Tax Act of 2007, the $100,000 amount is changed to $125,000, and the $400,000 amount is changed to $500,000 for tax years 2007 through 2010, with annual inflation adjustments.
Rev. Proc. 2007-60 is effective for tax years beginning in 2007. Rev. Proc. 2006-53 which previously set inflation adjustments relating to Section 179 has been superseded.