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Section 179 - THE BASICS - 2016


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Deduct 100% of the equipment you acquire this year, this year. We'll help you plan for it, and make sure you can. You might make all of next years equipment finance payments, with the tax savings this year.

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Section 179 - THE BASICS - 2016

  1. 1. 20 Division St., Coldwater, MI 49036 -- 888.510.1355 * 888.548.9213 (fax) Understanding the Section 179 Deduction What Is the Section 179 Deduction? Is your business considering investment in large-cap items, such as new or used heavy equipment, semis or other commercial trucks, and even high-dollar business software, or other capital investing? If so, the Section 179 deduction allowed by the IRS is an incentive you need to understand and use to your financial advantage. First, this deduction was finally put in place for multiple years at higher levels, beginning in late-2015. So, now it becomes a more effective tool for business, because we can plan for it. We cannot focus on every detail of the Section 179 deduction in this publication (it is, after all, an IRS creation and is subject to various qualifications). However, we will attempt to provide a basic understanding of qualifications and benefits. Section 179 is essentially a tax break given to businesses that allows deduction of the full purchase price of equipment purchased – or financed – against their gross income. This is a significant incentive for companies to make investments in purchasing equipment and growing their business. Depreciation is often utilized by businesses to write off the value of purchased equipment over the life of the asset, but Section 179 provides the distinct advantage of deducting the full price in the year acquired. The equipment purchased must be placed in service by the end of the year for which the deduction is taken.
  2. 2. 20 Division St., Coldwater, MI 49036 -- 888.510.1355 * 888.548.9213 (fax) What Qualifies for the Section 179 Deduction? A variety of new/used business equipment purchases qualify as assets for Section 179:  Machines utilized for business use  Business vehicles  Office furniture and office equipment  Computers and commercial “off the shelf” software  Equipment purchased for partial business use (this is generally deducted at the percentage the equipment is used for business) An additional consideration for business tax advantage is that once you have maximized your deduction for Section 179, purchases of new equipment may also qualify for the “Bonus Depreciation” deduction, which for 2016 is set at 50%. How do You Claim the Section 179 Deduction? Section 179 deductions are elective. You can claim individual equipment for the deduction, and not claim it for other assets. But it is not automatic. You must elect this deduction when filing your taxes using the proper IRS form 4562. Your tax preparer can assist with that as well. Making Section 179 Work for You – Consulting with Experts When planning a purchase or financing of new or used trucks or other equipment check with the seller to verify if the equipment or software qualifies for the Section 179 deduction. Many suppliers are well aware of their qualifying status, and may even display the “Section 179 Qualified” symbol on their web sites. Ask us; we’ll help you get the information you need.