Big Changes for 2010
Increased Capital Purchases Write-off with Bonus Depreciation
Essentially, Section 179 allows businesses to deduct the full purchase price of qualifying equipment, purchased or financed, during this year. That means if you buy or lease a piece of equipment, you can deduct the FULL PURCHASE PRICE from your gross income.
Section 179 Summary
The limits for Section 179 have been increased - you can now deduct up to $500,000 of equipment, software, and/or vehicles.
Business Incentive (applies to new or used assets purchased in 2010-2011) - Beneficial for businesses with total asset purchases of less than $2 million. You will be able to expense up to $500,000 of those capital purchases.
First Year Bonus Depreciation (applies to new assets only purchased in 2010-2011) - Bonus 50-percent depreciation allowed to be taken in the first year.
This is a substantial increase, and has many business owners excited, because with these new limits (and reinstating of the bonus 50% depreciation), 2010 might be far better than many thought in terms of bottom line.
For details, please visit www.section179.org or estimate your tax savings with 2010 Section 179 Allowance Calculator
*Consult with your Tax Advisor for further details and qualifications or visit www.IRS.gov
Q & A
Q -What equipment qualifies?
A - All kinds of equipment. Here's a partial list:
- Computer Software (off the shelf)
- Equipment (machines, etc) purchased for business use
- Tangible personal property used in business
- Business Vehicles with a gross vehicle weight in excess of 6,000 lbs
- Office Furniture
- Office Equipment
- Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment)
- Partial Business Use (equipment that is purchased for business use and personal use - generally, your deduction will be based on the percentage of time you use the equipment for business purposes.)
Q - Do I have to do this now (in 2010) to take advantage of Section 179?
A - A HUGE yes, if you want to affect your bottom line for 2010. That's because the limits were raised in September, 2010. So with the new, higher limits, Section 179 becomes a really big deal for this calendar year.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.