The Section 179 Deduction

WHAT IS SECTION 179?

Section 179 allows companies to deduct the full purchase price of qualifying equipment or software that was financed or purchased during the tax year. This means that if you bought or leased qualifying equipment in 2018, you are able to deduct the full purchase price from your gross income. In addition, you may also qualify for bonus depreciation. Section 179 was created to provide tax relief for small businesses, although larger businesses can also benefit from this tax code.

SECTION 179 & BONUS DEPRECIATION – FEATURES/ HIGHLIGHTS

Section 179 Deduction for 2018

  • For both new and used equipment
  • Up to $1,000,000 if equipment is installed and put into service by midnight December 31, 2018
  • Up to $2,500,000 in qualified purchases. The deduction now includes improvements to nonresidential property: HVAC, roof, fire protection, alarms and security systems.

Bonus Depreciation

  • New and Used Equipment
  • Bonus Depreciation

Example

Total Equipment Purchases: $1,300,000
Section 179 Deduction: ($1,000,000)
Bonus Depreciation (100% in 2018): ($300,000)
Total Deduction (20% of useful 5yr life of remaining amount): $1,300,000
Cash Savings ($1,300,000 x 21% tax rate): $273,000
Cost of Equipment after Tax (assuming 21% tax rate) equals this: $1,027,000

TAKE ADVANTAGE OF SECTION 179

Put simply, Section 179 allows you to take a full tax deduction when you lease, buy, or finance qualifying equipment or software. All qualifying equipment must be purchased and in use by midnight of December 31st, 2018. If you would like to learn more about Section 179 or if you’re ready to take advantage of this tax incentive, there is still time. Contact KLC Financial today and we would be happy to discuss your options and answer any questions you may have.

 

Disclaimer: KLC Financial, Inc. and its owners are not tax advisors, and this page is not intended to offer tax advice. Please consult with a qualified professional concerning your specific situation.

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