We would like to remind our customers that Section 179 of the United States Internal Revenue Code (26 U.S.C. § 179) has been restored to a write-off of up to $1,000,000 for 2018. To qualify, the equipment must be:
- Installed and placed in service during the same tax year
- More than 50% of the use of the equipment must be used for the business
In addition, a bonus depreciation is extended through 2018 for all businesses who have purchased over $2.5 million in equipment. This bonus depreciation is 100% in 2018!
How does all this work? Our accountants have provided us with the following examples to help explain it:
Section 179 deduction is not a complicated tax code, it is one of the few government incentives available to small business. When a company buys equipment, whether by a cash purchase or by financing it, the company typically spreads the expense over several years through depreciation. For example, if a company buys a machine for $100,000, the company can expense about $20,000 per year through depreciation for 5 years. Section 179 allows that company to expense the entire $100,000 during the current tax year if there is sufficient income to offset the expense, thereby accelerating the tax savings.
Section 179 Expensing Example:
- Cost of Equipment After All Bancroft Discounts: $150,000.00
- Section 179 Deduction: $150,000.00
- Total First Year Deduction: $150,000.00
- 35% Savings on Equipment Purchase: $52,500.00
- Lowered Cost of Equipment After Tax Savings: $97,500.00
Remember! Our calendar is almost full for 2018. Contact us today to get your welding machine shipped by the end of the year so you can take advantage of Section 179 expensing. Visit www.section179.org for more details.