What is Section 179?
Section 179 of the IRS tax code allows businesses to deduct the FULL purchase price of qualifying software and equipment purchased or financed during the tax year (bought or leased), from their gross income. It's an incentive created by the U.S. Government to encourage businesses to buy equipment and invest in their operations.
The Section 179 deduction allows deductions at the increased level of $500,000 for qualifying software and equipment placed in service for tax year 2011, with the total amount of equipment purchased up to $2 million (deductions begin to phase out dollar for dollar after $2 million).
To get the deduction for tax year 2011, you have to act now, as of midnight on 12/31/2011, Section 179 will no longer affect your 2011 profits.
Example:
| Cost of Equipment |
$100,000 |
| Section 179 Deduction |
$100,000 |
| Regular First Year Depreciation Deduction |
$0 |
| Total First Year Deduction |
$100,000 |
|
Cash Savings on your Equipment Purchase
(assuming a 35% tax bracket)
|
$35,000 |
| Lowered Cost of Equipment After Tax Savings |
$65,000 |
**This does not constitute tax or legal advice. Consult your accountant or tax advisor regarding Section 179 Capital Investment Deduction.
For more information, please visit: www.section179.org
About Section179.org
www.Section179.Org is a website sponsored by finance and tax professionals providing a comprehensive resource for their clients (and anyone else looking for Section 179 information). With comprehensive Section 179 information written in “plain English” and tools like an updated Section 179 calculator, the site has proven to be successful in answering almost any Section 179 question a businessperson could have. It is also continually updated, bringing businesspeople the latest information on this important tax deduction for vehicles, software, and equipment.