Category Archives: Tax Code

Significant Tax Savings for 2012 Equipment Purchases

The following information about the tax benefits available in 2012 was shared with MSL from Standard Horizon:

With legislation pending that will decrease these tax savings for 2013 and beyond, you have an even better reason to invest in new technology in 2012!

What is Section 179 and Bonus Depreciation?

Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of financed or leased equipment within the specified dollar limits rather than depreciate these costs over time. Nearly every Standard Horizon post-press product qualifies under this program. Stimulus acts over the past several years have generously increased the limits of the Section 179 Deduction and also added a one-time “Bonus Depreciation” on equipment that exceeded the deduction limit. The total deduction for 2012 is $125,000 (not adjusted for inflation) when the total amount of equipment purchased does not exceed $500,000. The Section 179 Deduction begins to phase out when capital expenditures exceed $500,000. In addition to any property that qualifies for Section 179 expensing, companies may also take advantage of a special Bonus Depreciation of 50% in 2012 for any amount over the Section 179 Deduction. This is a large incentive for businesses of all sizes, and will result in a substantial boost to their bottom line increasing the ROI of their equipment purchase. To qualify for both the deduction and bonus depreciation, the equipment must be purchased or leased and placed into service before December 31, 2012. To determine potential tax savings, click here for the on-line calculator.

Why Purchase in 2012?

The maximum deduction and phase-out threshold are set to revert back to the original amounts of $25,000 and $200,000 respectively beginning in 2013 and beyond. Companies would be wise to take advantage of Section 179 now before the enhanced tax deductions and bonus depreciations expire. Although proposals have been presented to extend Section 179 expensing, the likelihood of agreement in this election year is uncertain – and, in the absence of any new tax bills, the Section 179 Deduction would return to the normal amounts stated above.

If you are thinking about buying equipment, then this is definitely the year to do it. The government will give them a very generous tax deduction in 2012 – a tax deduction which is scheduled to be drastically reduced in 2013.

Don’t forget to sign-up for you VIP live demo at Graph Expo 2012 with MSL and Standard Horizon, Booth 1244.

Bonus Depreciation & Section 179 through Dec. 31st, 2011

On Dec. 17, 2010 the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRIA) was signed. In addition to providing incentives for small businesses, the TRIA extended the depreciation bonus for 2011 and 2012 and extended Sec. 179 through the end of 2012 to encourage equipment purchasing. Go to www.depreciationbonus.org for more details.

CURRENT 2011 Bonus Depreciation and Section 179 through December 31st, 2011

Sec 179 deduction limit is $500,000 on purchases of new or used equipment put in service by Dec, 31 2011.
Bonus Depreciation in 2011 allows businesses to write off 100% of the purchase price of NEW equipment put into service by Dec, 31 2011.

After January 1, 2012 Bonus Depreciation and Section 179 benefits will be reduced!!

Sec 179 deduction limit will decrease to $120,000 on purchases of new or used equipment put in service in 2012.
Bonus Depreciation will decrease to 50% for purchases of NEW equipment put into service in 2012.

By lowering your taxable income now, your business can dramatically cut its tax bill, freeing up cash to invest in other parts of your business.

Section 179 of the Stimulus Act in 2009

Tax code is about as dry as any topic can be, but in this article we’ll simplify and offer some quick explanations to some of the incentives Uncle Sam if offering businesses this year. Most of us are familiar with the 2008 Economic Stimulus Act of 2008 because those who qualified received checks from the government. What many are unfamiliar with was Section 179 which is a stimulus for businesses. It offers incentive for American business to make equipment upgrades and purchases. This Section 179 has been extended to be available to qualifying organizations in 2009

In summary, Section 179 allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. This is essentially accelerated depreciation. Before the stimulus act, depreciation happened over 7 years. Each passing year you would deduct a fraction of the cost of your equipment from your gross income, thereby marginally reducing your taxes over time. Section 179 gives you all of that deduction from your gross income in one shot. The accelerated depreciation allowed by Section 179 of the 2008 Economic Stimulus Act can reduce the gross cost of equipment purchases by as much as 30%.

Example of Section 179 Tax Benefits (Courtesy of section179.org)

There are some limitations to Section 179. No more than $250,000 can be written off in 2009 and no more than $800,000 of equipment can be purchased in 2008 to qualify. However, in 2009, businesses that exceed the $250k deduction limit can take a bonus depreciation of 50% on the amount that exceeds the limit. And then also take normal depreciation on the rest.

This general info should help give you some information on Section 179. Tax code can be confusing and its important to understand these incredible incentives. In times of economic slowdown its vital to take advantage of every bit of savings we can. MSL recommends you consult your own financial adviser or CPA for advice.

For more information on this topic please visit section179.org

Section 179 of the Stimulus Act