Section 179 Changes — Deductions for Equipment and Software

 In Blog, Educational Issues, Featured, Federal Tax Updates, Tax Planning

News Alert: Section 179 Gets Enhanced for 2013 and 2012

Simply explained, Section 179 covers tax deductions for qualifying equipment (including vehicles) and/or software that has been purchased, financed, or leased.  Recent changes, due to the “American Taxpayer Relief Act of 2012,” have enhanced deductions retroactively for 2012 as well as for 2013.

2013 Deduction Limit = $500,000

2013 Limit on Capital Purchases = $2,000,000

2013 Bonus Depreciation = 50%

The limits noted above are as of 1/1/2013 and are for tax year 2013.  In addition, 2012’s old limit of $125,000 has been raised to $500,000.  This means you can can take advantage of the new raised limits for qualifying purchases you made in 2012.

Section 179 deductions are available for most new and used capital equipment including certain software.

Bonus Depreciation can be taken on new equipment only (no used equipment and no software)

When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation unless the business has no taxable profit in the given year.

Buy Equipment and Software in 2013

Due to the extension of Section 179 Under the “HIRE Act of 2010”, the enhanced limits under the “Jobs Act of 2010”, and the extension of the enhancements into 2013 via the “American Taxpayer Relief Act of 2012”, you can basically write off 100% of the equipment and software your business needs to buy or finance up to $139,000 this year.

Sample Savings

Using a $350,000 equipment cost for a sample calculation shows how taking advantage of the Section 179 Deduction can significantly lower the true cost of the equipment purchased, financed or leased. In this example, $350,000 in equipment purchased has a true cost of $227,500. That’s $122,500 added to your bottom line, which is substantial.

Taking advantage of Section 179 Deductions will allow your business to purchase needed equipment, vehicles, and software and keep more of your capital.  Call us today at 559-924-1225 to find how this deductions could best benefit you.  We’re your “answer people.”




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