Section 179 underwent big changes in 2010, which makes learning about this important tax deduction vital to any business.
First, some good news: Not only has Section 179 returned for 2010, it's also been enhanced in the passage of The Jobs Act of 2010 (HR 5279). In essence, the limits for Section 179 have been increased - you can now deduct up to $500,000 of equipment, software, and/or vehicles.
This is a substantial increase, and has many business owners excited, because with these new limits coupled with the reinstating of Bonus Depreciation of 50% prior to Sep 8, 2010 and 100% after Sep 8, 2010.
Section 179 provides your business with substantial, immediate tax relief in 2010.
But did you know that combined with equipment financing, Section 179 literally deposits thousands of dollars in your bank account?
This is it – this is the only government help that your business is going to get!
And the clock is ticking, 2010 is almost over...
And to help you calculate your savings, we've provided the following calculator for Section 179 deductions in 2010. This calculator is fully updated with the current limits for the 2010 tax year, and gives you a clear picture of just how much Section 179 can save you in 2010. Note Calculator assumes assets placed in service prior to 09/08/2010. Go ahead – play with it.
If the numbers look good to you, they can look even better with the right equipment financing. With interest rates holding steady, a solid equipment financing partner can make Section 179 especially attractive in 2010. Here at Crest Capital, we can provide you with an Equipment Lease or Equipment Financing Loan that is structured to allow you to take full advantage of the Section 179 deduction. And if you need to finance more than the allowed deduction limit (which is still quite high in 2010), you can depreciate the excess.
Now here's what we mean by having the right equipment financing: depending on the equipment you finance, your first year's payments might be LESS than the Section 179 deduction you take. This means financing equipment in 2010 can actually be profitable to your bottom line this year.
Contact Crest Capital for a complimentary Equipment Financing or Equipment Lease Consultation, or read on to learn more about Section 179 in 2010.
At its heart, Section 179 allows small and medium sized businesses to deduct the full amount of the purchase price of equipment bought and put into use during the 2010 calendar year. Equipment can include machinery, certain vehicles, office equipment / office machines, office furniture and fixtures, computers and software, and many other types of tangible equipment. However, some changes have been made:
Then (2008/2009): Two years ago, Section 179 received an enhancement from the Economic Stimulus Act of 2008. The deduction limits were raised to $250,000 (which was almost double from previous years), and it also installed a "bonus" first year depreciation of 50% (which was allowed on purchases that exceeded the limit.) In 2009, these new, higher limits were kept.
Now (2010): Section 179 was renewed in March as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010. And then it got enhanced with HR 5279, the Small Business Jobs and Credit Act of 2010. The deduction limit was raised to $500,000, and the bonus 50% depreciation was restored (the HIRE Act had not extended the bonus depreciation).
Section 179 has been a boon to businesses. And we're happy to see it get enhanced for 2010 (especially since 2010 has been a difficult year for many). But, the best news of all is HR 5297 was passed in time to make 2010's numbers look a whole lot better (and also let you get that new equipment NOW).
Don't forget - we want to help you with your Section 179 equipment financing, and we're offering a $179 bonus for every $10,000 financed. Click here for details
Like previous years, there are limits on Section 179. The main limit is that the total cost of the equipment you are deducting cannot exceed the total amount of the taxable income you are reporting. In essence, this means you cannot have big deductions while also showing no income. Also, you always need to check your local state tax laws regarding equipment purchases that may impact your state tax return differently than your federal tax return.
As far as types of eligible business equipment, most of the "larger" tangible items necessary to
run a business qualify for the Section 179 deduction, including:
In basic terms, almost any type of "portable" (non-installed/permanent) assets qualifies. If you are unsure if something you are considering financing applies, you can always ask us.
Here's another fact you may find interesting: the equipment need not be new - even used equipment and/or vehicles can qualify if they are new to you / your company. (No, you can't sell yourself equipment and take the Section 179 deduction – you must buy the equipment from an unrelated third-party seller.)
In the end, to ensure that your property qualifies, please reference Publication 946.
Remember, Section 179 changed in 2010. If you want to take advantage of the new, higher limits in 2010, we urge you to act now. Contact Crest Capital for a free consultation.
U.S. Tax Code Section 179 is a business equipment expense deduction that is provided for small and medium sized businesses (any business acquiring less than $2,000,000 of equipment in a given year fully qualifies for Section 179). It is used by companies who elect to treat the purchase of qualifying property as an expense rather than a capital expenditure, and provides substantial tax relief.
The Section 179 election, which is made on Form 4562, is for the calendar tax year the property was purchased and placed into service (Jan 01 – Dec 31). For further details regarding Section 179, contact your local tax advisor or visit www.irs.gov
For information on prior tax years, here are links to the 2009 Section 179 Calculator page, the 2008 Section 179 Calculator page, and the 2007 Section 179 Calculator page - each
contains information and applicable limits on the Section 179 Tax Deductions available in those prior years.
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