The Section 179 Tax Deduction Increases Have Officially Been Extended by the "American Recovery and Reinvestment Act" Through December 31, 2009
United States Code Title 26, Section 179, or USC 26 §179; simply known as Section 179 Depreciation Deduction of 2008, has been officially extended by Section 17 of the American Recovery and Reinvestment Act of 2009 through December 31, 2009, and the allowable deduction has been increased to $250,000.00.
Section 179 Made Simple
This is a brief summary of Section 179 and the benefits it gives to business owners.
- Section 179 allows businesses to deduct the full price of equipment purchased in 2009 up to $250,000, giving your customers good reason to purchase and lease equipment from you now.
- Section 179 significantly lowers the amount paid for equipment. For instance, around $7,000 will be returned to your customer for a $20,000 equipment purchase. That's considerably more than the total of the monthly payments that will be made for leasing the equipment, and it lowers the actual price paid for the equipment to around $13,000.
- Section 179 is easy for your customer to use. The business fills out Part 1 of IRS form 4562 and attaches it to their tax return.
Section 179 Incentives to Lease
Leasing and Section 179
Your customers can lease equipment and still take full advantage of the Section 179 deduction. As a matter of fact, leasing equipment is the best strategy for many businesses, because it can help with cash flow and with profits.
Non-Tax I Capital Lease
A non-tax capital lease allows businesses to take full advantage of the Section 179 Deduction and make smaller payments. With a non-tax capital lease the business can acquire and write off $250,000 worth of equipment this year, while spending a lot less. $1.00 Buyout Leases and 10% Purchase Upon Termination (PUT) Leases are both non-tax capital leases. The amount a business saves in taxes will often be MORE than the total of their first year's payments.
Tax Advantages of Equipment Leasing
Your customers can lease their equipment for up to 60 months and deduct the full amount of the equipment this year, although they won't pay the full amount for it this year. Since the amount the business will save in taxes will probably be more than the amount made in payments, leasing then taking the tax deduction can actually be profitable.
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