Since we all love curling up beside the fireplace with the tax code on a lazy night (not) and would rather be doing our taxes than baking delicious desserts (not) and look forward to April 15th every year more than any other holiday (definitely not), we thought it might be helpful to do a simple overview of the Section 179 tax deduction of the IRS tax code. Before you click away from impending boredom, please note, we are not tax experts, we just observe benefits that our clients receive from the financial incentives included in Section 179 and think they are worth sharing!
SECTION 179 TAX DEDUCTION INFORMATION
The Section 179 Deduction is centered on deprecation of a business asset. Section 179 gives your company the ability to depreciate a piece of equipment faster during the year that it is purchased. The benefit of writing off a bigger chuck of the purchase price upfront is being able to save on taxes for a capital expenditures, reduce the true cost of the purchase, and improve the bottom line.
In 2016 your company is able to write off up to $500,000 immediately, rather than depreciating the item over 5, 7, or 10 years. Why is this an option in the tax code? The purpose is to get companies out purchasing new equipment, something the government happens to like.
There is also a bonus deduction available through Section 179 and numerous deduction rules for various asset classes. It might sound a little complex, and there are a lot of moving parts within the code, but the bottom line is if you are considering a capital expense in 2016 you should consult your accountant to see if it would qualify for the Section 179 benefits.
Of course, you shouldn’t be trying to spend money for the sake of “saving” money. If you have found a new piece of capital equipment that will save your company time, improve quality, or remove a bottleneck in your business that results in positive ROI, take a look at Section 179 to see if there are additional advantages you can obtain from making your next capital investment.
SECTION 179 TAX DEDUCTION LINKS
Section 179 Website
Section 179 Calculator
* Note: FoodTools is not a tax expert. If you are considering Section 179 for your purchase this year, please consult your accountant. They are good at taxes and may or may not be good at cutting cakes.
** Note: FoodTools IS a food portioning expert. If you’re thinking about automating your food product portioning, consult a FoodTools expert today!