IRS Section 179 elaboration, in layman's terms please =)

[ZooCity]

Ok, so the big change is the 179 option is being capped at 25k.  That's good to know, thanks. 

I agree with all said here.  This stuff really confuses me but my understanding is:

The only reason I can see to sec 179 something is if it offsets that year's profit and actually reduces your taxable income to a degree that you are taxed less in that year than you normally would have been.  Otherwise, it's often preferable to spread out this offset to your income via depreciation.

The IRS covers all their bases- the tax stuff relating to the equipment will come out the same whether depreciated or expensed - that is, you will get the same tax benefit specific to the equipment over 5 or 7 years depreciated as you would by expensing it all in one year. 

This is where the sales argument is silly in "normal" years where a cap isn't about to be placed on the option. Except in the case mentioned above, expensing something in one year v. 5 or 7 is simply moving the expense values around.

[screenxpress]

Short and sweet, is that the deduction for that piece of equipment can be done in one shot rather than through depreciation.

So, if you are paying around 20% tax rate, then you will, in one shot, essentially save 20% of the purchase price (not the entire price) This is and has always been the most common myth  of "write-offs"

Exactly. 

Say your business has profitable sales of $100,000 and NO expenses (for numbers sake) and you're a simple proprietorship (meaning all unexpensed profits go to your personal income).  The $100,000 goes to your personal income tax and if that tax bracket is 20%, then your tax is $20,000.

Now take a full current year 179 deduction (equipment purchase) of 80,000 off the $100,000 making a carry forward to your personal of only $20,000.  Here's where the numbers skew a bit as your bracket would be lower.  But let's say it stays the same at 20%.  Then the tax would be $4,000, for a tax savings of $16,000.  Since you still paid $80,000 for the equipment, you can consider the equipment cost was only $64,000. 

Just be sure and watch Salvage value if/when you sell it.  That's the amount you have to claim if you sell it (or trade it) before it's lived out its life and is considered scrap. 

Leasing - I always thought leasing was 100% write-off with no consideration of depreciation.  That's why the big corporations sell their home office buildings and lease them back for 99 years.  Maybe something about that has changed.  Of course, with leasing you don't own a thing.

Again, always consult a tax attorney (my suggestion is go with one that is an attorney too) when looking at really big numbers.

My 2c.