What is the limitation for the 179 deduction in terms of property cost during the year?

The correct choice reflects the limit imposed on the Section 179 deduction, which allows businesses to immediately deduct the cost of qualifying property rather than capitalizing and depreciating it over time. For the tax year 2023, the maximum deduction is indeed set at $1,160,000, but this limit begins to phase out dollar-for-dollar when total equipment purchases exceed $2,890,000.

Therefore, while the initial limit of $1,160,000 applies, the important aspect is that the total cost of qualifying property that a business can claim these deductions for is capped at that amount, with the phase-out for larger expenses playing a crucial role in determining actual claimable amounts as expenditures increase.

The mention of $2,000,000 as a limit in relation to the property cost outlines that this is the threshold when the deduction begins to phase out, making it a significant figure in understanding how the deduction applies to business expenditures within the limits established by the IRS.