Pay Close Attention! Tax Credit For Manufacturers!

102 Flares Twitter 42 Facebook 16 Google+ 29 Pin It Share 12 LinkedIn 3 Buffer 0 Filament.io 102 Flares ×

Section 179

An IRS tax code that presently allows businesses to immediately deduct up to $500,000 on qualifying New and Used equipment and software purchases.Tax credit

Strategically purchasing equipment or technology for your business this year could significantly reduce your cost of ownership.

It provides substantial tax relief for companies who elect to treat the purchase of qualifying equipment as an expense rather than a capital expenditure.

There is a 50% bonus deduction for NEW equipment.

 

The Nitty-Gritty on How You Can Take Advantage of This 

(The deduction is NOT automatic. You need to do the proper paperwork.)

Paperwork 

Part One of IRS form 4562. 

What Qualifies? 

Ordinarily all material goods qualify for the deduction. BUT this equipment must be purchased AND put into use during the tax year.

Some examples of qualifying purchases include:

  • Capital equipment
  • Office equipment
  • Computers
  • Software
  • Furniture
  • Business vehicles (gross weight in excess of 6,000 lbs.) 

How much of a write-off? 

For the 2013 tax year, businesses may take a 100% deduction on purchased or leased equipment (as long as the total is below $500,000).

The maximum deduction allowable?

The limit is back up* to $500,000 for equipment deductions.

When can you take advantage of this? Act Fast! 

The deadline for the purchase and deployment of eligible equipment is December 31, 2013. (Make this deduction as you file your tax return for the year.) 

Purchase vs. Lease 

This depends on your businesses situation. Important: With the Section 179 deduction, you can write off 100% (up to $500,000) of the price of your qualifying equipment but you don’t have to spend 100%. With a properly structured lease, your tax deduction can actually be more than your first year of payments. 

Section 179 Limitations 

The Section 179 limit for 1st year expense in 2013 is now $500,000. This can be applied to both new and used equipment. What this could mean for your business: Instead of depreciating a newly acquired asset over several years, the Section 179 expense allows a business to take a current year deduction of the full purchase amount up to $500,000 for assets under $2,000,000. This benefit begins to decline after total new asset acquisition tops $2,000,000. Over $2,000,000, the amount you can deduct decreases by $1 for every dollar spent above $2,000,000.

 

* Section 179 has been affected by various Stimulus Acts enacted by congress mostly specifically related to the dollar limits of the deduction.

2007 Deduction Limit: $125,000

2008 Deduction Limit: $250,000

2009 Deduction Limit: $250,000

2010 Deduction Limit: $500,000

2011 Deduction Limit: $500,000

2012 Deduction Limit: $139,000

2013 Deduction Limit: $500,000

That’s an increase of a little over $360,000 from 2012. 

 

Deduction decreases dollar-for-dollar after equipment purchase totals exceed the

following:

2007 Total equipment purchases: $500,000

2008/2009 Total equipment purchases: $800,000

2010/2011 Total equipment purchases: $2,000,000

2012 Total equipment purchases: $560,000

2013 Total equipment purchases: $2 million

Take advantage of this NOW because Section 179 limits are slated to decrease next year!

What Savings Looks Like: 

Your Equipment Cost $75,000
Section 179 Deduction (up to $500,000) $75,00
50% Bonus Deduction *only for new equipment                                                                                    (Equipment Cost – Deduction) x 50%                  
Total First Year Deduction                                                                                                  (Section179 Deduction + Bonus Deduction)   $75,000
Total Savings                                                                                                                         (Total Deduction x Tax Rate)                                                                                     (Assuming a 35% tax bracket)          $26,250
Equipment Cost After Savings                                                                      (Equipment Cost – Total Savings) $48,750

                                                                                                     

Go to http://www.section179.org/section_179_calculator.html to calculate your deduction and tax savings.       

Paragraph-separator                                                   

Therese Yacenda is the Social Media Manager at Accelerated Buy Sell, Inc. and Manufacturing Web Solutions as well as a contributing author to the blog. She orchestrates the social media landscape for the “Accelerated Group of Companies” that provides tools and services to help manufacturers grow and exit strategies to maximize dollars when they are ready to retire or sell their manufacturing business. Accelerated’s group of companies that provide services to the manufacturing industry includes:

www.AcceleratedBuySell.com – Provides Online Industrial Auction Services, Used Equipment Auctions, Capital Equipment Auctions, Plant Liquidations, Industrial Plant Cleanout Services, Used Machinery Location Services, Certified Machine Tool and Equipment Appraisals, and more.

www.AcceleratedMfgBrokers.com – Specializes in Manufacturing Business Brokerage and Mergers and Acquisitions.  We help manufacturers develop exit strategies to maximize retirement dollars, and successful manufacturers expand through acquisition of other manufacturing companies, product lines and customer lists.  Manufacturing Companies for sale throughout the United States are listed on this site.

www.AcceleratedRE.com – Provides Industrial Real Estate Brokerage Services, Online Real Estate Auctions, Sealed Bid Real Estate Auctions and complete industrial facility cleanout services.

www.IgniteMfg.com – Provides funding for products made in the USA, and engineering/manufacturing educational needs through Crowd Funding.

www.MfgWebSolutions.com – Provides web development and social media services for manufacturers at under-market rates.

Therese Yacenda is a contributing author to:

blog.AcceleratedBuySell.com - A site that provides the latest manufacturing news, statistics and opinion.   It also provides information on how to grow a manufacturing business, and what to do if you are a manufacturing company that needs to close.

MFGWebSolutions.com/blog - Provides the latest information on social media and web development for manufacturers.  It gives manufacturers tips and tricks for boosting their web presence.

                                 

 

                                    

 

 

 

About Therese Yacenda

Therese Yacenda cultivates the social at Accelerated Buy Sell, Inc., regularly contributes to the blog and composes the monthly newsletter, putting out information to empower the Manufacturing Industry. In July of 2012 the Accelerated Group of companies launched AcceleratedWebSolutions.net where Therese manages the social media content strategies that create a strong web presence for clients.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>