The US government has put a program together, Section 179, specifically for small to mid-sized business owners allowing them to expense or deduct their full equipment purchases from the same year tax return or “gross income”.
Taking advantage of Section 179 and acquiring the equipment your business needs, ILS can structure a tailored finance agreement which will allow you to expense the full amount, 100% of the equipment on this year’s current tax documents and you have the flexibility to pay off the remaining equipment amount either quickly, in as little as 2 years or as long as 8 years!
The property must be Tangible Personal Property, and must be used for the business at a rate greater than 50%. New or used equipment is accepted. It is probable that businesses purchase Tangible Personal Property consistently: Equipment (machines, etc.), manufacturing tools, vehicles, software, and furniture.
Don’t forget to keep complete records of; lease agreement, purchasing details, acquired & delivery details of your business equipment!
*Tax information provided above is intended for educational purposes only. Please consult tax attorney for expert advice.*
This year’s deduction limit has dramatically increased from 2015's limits of $25,000. The maximum equipment cost that may be written off in the 2016 calendar year is $500,000. The maximum amount that your business can spend to qualify is $2,000,000 total on equipment. For brand new equipment only, the bonus depreciation rate is 50%. For equipment to qualify for the deduction it must be financed and put in place by December 31st, 2016.
Section 179 was originally referred to as the “SUV/Hummer deduction.” It was used to offset the cost of an SUV or business vehicle costs, which was included in the “Stimulus Act.” The Stimulus Act was created to improve the economy and although it continues to change, it is the most beneficial tax benefit for small businesses in particular.