Section 179 of the Internal Revenue Code

Section 179 of the Internal Revenue Code

Equipment Purchase:  Small businesses buying many types of equipment get a bigger tax break in 2017.  The section 179 deduction will be $510,000 up $10,000 from 2016.  The deduction, intended for small businesses, allows them to deduct up front rather than depreciate the costs of equipment like computers, vehicles, office equipment, manufacturing machines and furniture as well as some types of real property.  But, air conditioning and heating equipment and land and improvements to land like paved parking areas are not eligible for the deduction. 

Real Life Example:

Let’s say a C70 is leased and installed in December 2017.  The 60-month lease payment is $750 per month means that $45,000 will be paid over the term of the lease.  No payment is made in 2017 however, let’s say the value of the C70 is 50k and the company is in a 36% tax bracket. $50,000 x 36%=$18,000 tax break.  

This means if the company owed you $30,000 in taxes and they leased the C70 and utilized Section 179, they’d only owe $12,000.  This is a powerful tool.