Using Section 179 while leasing a equipment for your business could possibly be the most profitable decision you make this year.
The taxes you save with the deduction will almost always exceed your cash outlay for the year when you combine an Equipment Lease with a full Section 179 deduction. It is a bottom-line enhancing tool that allows you to add new equipment for your business.
The opportunity to use Section 179 when leasing equipment provides the ability to deduct the full amount of the equipment without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction.
With Section 179 your company is able to lease equipment while taking full advantage of the deduction. A non-tax capital lease allows your company to acquire and write-off equipment this year while not having to spend that amount in 2019.
The Section 179 deduction is good on new and used equipment. To take the deduction for tax year 2019, the equipment must be financed or purchased and put into service between January 1, 2019 and the end of the day on December 31, 2019.
The maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending limit makes Section 179 a tax incentive tailored to small businesses.
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.
Leased Equipment:
First Year Write-off:
100% Bonus 1st Year Depreciation:
Normal 1st Year Depreciation:
Total First Year Deduction:
Cash Savings:
Equipment Cost After Tax:
$1,150,000
$1,000,000
$150,000
$0
$1,150,000
$402,500
$747,500
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. Leasing equipment that qualifies allows you to deduct the FULL PURCHASE PRICE from your gross income. The U.S. government developed Section 179 to encourage small businesses to purchase equipment will result in the growth of companies.
The benefits of Section 179 have increased over the years. Today, Section 179 is one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills.