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 News Alert - Both the 'Tax Relief Act of 2010' as well as the 'Jobs Act of 2010' that passed in late 2010 affected Section 179 in a positive way for this 2011 tax year.
"For profit" businesses can now write-off up to $500,000 (up from $250,000) of qualified equipment during the 2011 tax year - for new and used equipment, including new software. The maximum limit is $2 million (up from $800,000).
There is a "Bonus Depreciation" - 100 percent (taken after the $500k deduction limit is reached). Note, bonus depreciation is only for new equipment. This can also be taken by businesses that exceed $2 million in capital equipment purchases.
What is Section 179?
How Does Section 179 Work?
Leasing and Section 179
What are the Requirements?
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What is Section 179?
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.
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How Does Section 179 Work?
When your business buys certain pieces of equipment, it typically gets to write them off a little at a time through depreciation. Now, while it's true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. Section 179 lets your business do just that.
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Leasing and Section 179
Did you know that your company can lease equipment and still take full advantage of the Section 179 deduction? In fact, leasing equipment with the Section 179 deduction in mind is a preferred financial strategy for many businesses, as it can significantly help with not only cash flow, but with profits as well.
The advantage to leasing or financing equipment and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction. In many case, the deduction will actually be profit.
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What are the Requirements?
The time to lease/purchase is now! Any equipment purchased or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken (for tax year 2010, this means the equipment must be put into service between 01/01/2011 and 12/31/2011). NovaCopy offers competitive rates and payments that can often be deferred for 90 days. The special incentives outlined in Section 179 apply through this tax year.
- Taxpayer must purchase the qualified property during the 2011 tax year, subject to a binding
lease or purchase contract signed in 2011.
- Property must be placed in service in 2011
- Property has MACRS recovery period of less than 20 years.
- This stimulus only applies to "for profit" businesses. It does not apply to non-profits, such as churches, charities or government.
NovaCopy does not offer or provide tax or accounting advice. For more details on the Economic Stimulus Acts, Section 179 and other pertinent IRS financial details, please consult your financial advisor and/or tax and accounting professional(s).
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