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The revised 2010 IRS Section 179 tax deduction enables businesses to expense up $134,000 for new equipment purchases, but they must act before the end of the year to take advantage of the federal government's offer.
Section 179 allows businesses to expense, up to a certain limit, the entire purchase price of qualifying equipment financed in the year 2010 (i.e. deduct the entire purchase price from this year's current gross income as opposed to taking depreciation deductions over time). Qualifying equipment purchases generally include:
› Property attached to the business but not part of the structure
› Machines purchased for business use
› Tangible personal property used in business
› Business vehicles with a gross weight in excess of 6,000 lbs
› Computers and software
› Office furniture/equipment
Under the revised 2010 IRS Section 179 deduction, the equipment investment limit is $530,000 - meaning all businesses that purchase or finance less than $530,000 in business equipment will qualify to write-off up to $134,000 using IRS Section 179. Businesses purchasing more than $530,000.00 can still receive some Section 179 benefit until they reach a ceiling of $664,000.
Businesses choosing to lease rather than buy equipment could take advantage of the Section 179 deduction by leveraging a non-tax capital lease and writing off up to $134,000 through the Section 179 deduction. "The amount you save in taxes can actually exceed the payments," Section179.org adds.
To take advantage of this incentive, companies must act before the year ends as these figures will revert to their previous levels.
The purpose of these increases is to get people off the fence on whether or not to purchase new equipment and invest in their companies.
"The tax incentives might encourage companies to go ahead with projects they've sidelined or to speed up timelines on existing projects to get them in under the deadline," Hal Vandiver, executive vice president of the Material Handling Industry of America, tells Modern Materials Handling.
To calculate your potential tax savings click here.
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