Irvine, California (PRWEB) October 19, 2011
Section 179 of the IRS tax code can benefit those who are considering equipment leasing. What is Section 179? Envision Capital Group offers the following tips on Section 179.
Section 179 permits businesses to deduct the complete purchasing price of any/all qualified equipment and software purchased or financed during a tax year. Therefore, if you purchase or lease a qualifying piece of equipment, you can legally deduct the total cost of the item from your gross income. The US Government created this incentive to encourage businesses that might otherwise not purchase/lease equipment to do so, thereby investing in themselves.
2011 Deduction Limit – Previously $250K, the new deduction limit is now $500K and is good for new/used equipment and/or software.
2011 Limit on equipment purchases – Previously $800K, the new limit is now increased to $2 million dollars.
Bonus Depreciation – Once the $500k deduction limit is reached, a business can take advantage of the 100% bonus deduction. You can only use bonus depreciation on new equipment. It can be used by businesses that exceed $2 million dollars on their capital equipment purchases.
How Section 179 Works
When a business purchases specific equipment, it would typically write that equipment off a little bit at a time each year, using depreciation. For example, if a company spends $75,000 on equipment, it can write off $15,000 for 5 years.
Most businesses would prefer it if they could deduct the entire equipment purchase price during the year the item was purchased. In fact, if a business is able to do this they are far more likely to buy more equipment during the year, rather than waiting. That’s exactly why the government implemented the IRS Tax Code Section 179: to encourage businesses to invest in their future. This in turn, would give the economy a bit of a boost.
Let’s look at an another example. For most small businesses, adding $250,000 in equipment and/or software would be difficult and even more so using the standard method of depreciation. With Section 179, a business could purchase $250,000 worth of equipment and/or software and write off the entire amount during the 2011 tax year. In fact, a small business is likely to spend even more because they could significantly reduce taxes owed.
There are some limitations to Section 179 in the form of caps. After $2 million dollars are spent, one can no longer match dollar for dollar in deductions. However, the Tax Relief Act of 2010, states that large businesses, which exceed the $2 million threshold in capital expenditures, can take advantage of the bonus depreciation of 100% on the amount in excess of the $2 million dollars.
For more information, visit the US IRS Tax Code website. To learn more about how your equipment lease may be tax deductible or additional tips, call Envision Capital Group today at (888) 779-6989.
About Envision Capital Group:
Envision Capital Group was founded to help companies obtain the equipment necessary to sustain and grow their business through leading finance by providing flexible financing and leasing options. Envision Capital Group wishes to make your equipment acquisition as simple as possible with the least amount of administrative burden on your part. Envision Capital Group prides itself on servicing all business types and all credit histories.
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