Equipment Finance Insights

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Section 179: Equipment Finance

December 2nd, 2016

Section 179 provides businesses the ability to acquire new capital equipment and take a deduction of the full value, instead of using depreciation. Businesses must make this deduction the year the equipment is put into operational service.

Different types of equipment that qualifies includes retail software,  machinery,  power equipment, and automotive lifts — among many other equipment types. The general rule-of-thumb for qualifying equipment is any sort of electronics, software or hardware used to successfully operate a business.

Equipment finance and leasing also qualifies for the Section 179 deduction, even though a business may be making payments for several years. As long as the equipment financed or leased is put into service by December 31, it qualifies for the 2016 tax year.

Leasing and Equipment Financing:
– Non-tax capital leases and equipment finance agreements qualify for Section 179 depreciation.
– With a lease or equipment finance contract, businesses can acquire and write-off up to $500,000 worth of qualifying equipment during the 2016 tax year.

Qualifications:
– Equipment purchased must be put to use by December 31, 2016.
– Businesses may purchase new or used equipment, and or retail software, to qualify under Section 179.

Deduction Basics:
– Businesses are entitled to deduct up to $500,000 of the cost of qualifying equipment acquisitions.
– The maximum cap on equipment purchases is $2,000,000 during the 2016 tax season. Once this amount is reached, businesses can take bonus depreciation — for new equipment only.

Download the Section 179 fact sheet here. Advance Acceptance equipment financing and leasing services can help your business acquire the equipment needed this year, to maintain an operational edge in 2017. Always check with your tax adviser for specific details related to your business.

Content authored by Conrad Magalis.


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