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Tax Guru-Ker$tetter Letter
Saturday, January 05, 2008
Arkansas Section 179 Limits

Our State rulers in Little Rock made an attempt to conform to the much higher available Federal allowance for Section 179 expensing.  They seemed to have accomplished that for a few months, until our DC Rulers increased the maximum in the middle of 2007.  This means we now have another difference between the IRS and DFA levels.  However, the difference is now much smaller than it had been in past years.

This is from the most recent DFA newsletter:


Act 613 of 2007 adopted IRC Section 179 as in effect on January 1, 2007. At that time the maximum amount to be claimed was $112,000. This amount will be adjusted for inflation for the year 2008. In May 2007, Congress enacted an increase to $125,000. Arkansas has not adopted this increase.

For all purchases that qualify for Section 179 that were made after January 1, 2007, the maximum amount to be deducted for a calendar year tax return or any fiscal year tax return is $112,000, regardless of the fiscal year’s beginning date.

The investment limitation that was adopted is $450,000 and the maximum limitation is reduced dollar for dollar by the cost of qualified property placed in service during the tax year over the investment limitation. This will be adjusted for inflation for the year 2008. The code section 179 deduction is reduced to zero when the investment limitation reaches $562,000 (450,000 + 112,000).

Part of Section 179 dealing with the expensing cap on sport utility vehicles limitation of $25,000 was also adopted in this Act.


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