What is the dollar amount that Section 179 allows for a reduction when purchases exceed $800,000?

Section 179 of the Internal Revenue Code allows businesses to expense a certain amount of the cost of qualifying property in the year it is placed in service, rather than capitalizing the cost and depreciating it over time. For the tax year, there is a limit on the amount that can be expensed directly, which is subject to a phase-out threshold.

When purchases of qualifying property exceed $800,000, the maximum Section 179 expense deduction begins to phase out dollar-for-dollar. As of the recent tax guidelines, if the total amount of equipment and qualifying property purchases exceeds this threshold, the allowable deduction is reduced.

For the current tax framework, once purchases exceed $800,000, the Section 179 expense deduction is reduced by the amount that exceeds this threshold. This means that if a business purchases $800,001, the deduction would decrease by $1. With a maximum deduction of $1,080,000, if a business's purchases are just over the limit, it can still deduct part of the allowable amount, but it is reduced according to how much the total expenditures exceed the threshold.

Considering these rules, a deduction amount of $250,000 is the correct figure that's allowed when purchases exceed $800,000,