In our July 13th posting “Why choose to finance or lease assets?” we described a few reasons why business owners, CFOs, or other stakeholders finance asset purchases. As we approach the fourth quarter of 2011, certain tax advantages start to make more and more sense, especially for our small and medium sized clients. Through the Section 179 and Bonus Depreciation incentive programs, you can significantly reduce your tax liability this year.
Section 179 Deduction:
Use this optional deduction to deduct 100% of the purchase price of essential equipment or software that is placed in to service in 2011. If you choose not to elect the Section 179 deduction, the assets will be depreciated over a number of years according to standard tax law. Section 179 can apply for both new and used equipment or software.
Use the Bonus Depreciation program to deduct 100% of an asset’s cost if it is placed into service in 2011, or 50% of the asset cost if it is placed into service in 2012. This program is only available for new equipment. Like the Section 179 deduction, the alternative to using Bonus Depreciation is the typical depreciation of equipment over a longer period of time.
To learn more, visit the IRS page here: http://www.irs.gov/publications/p946/ch02.html.
For a simpler explanation, try checking out the Wikipedia page here: http://en.wikipedia.org/wiki/Section_179_depreciation_deduction.
If you would like to discuss how OneSource can help you plan for taxes this year, call me any time at 512-458-1300, ext 234. If you have an urgent equipment or software financing need, send us your request online by clicking Apply Now.
As always, please feel free to comment below with your questions and ideas, and thank you for reading.