Business owners who acquire equipment usually prefer to deduct the cost in a single tax year, rather than a little at a time over a number of years. This deduction is known by its section in the tax code, a Section 179 deduction.
Under Section 179, businesses that spend less than $800,000 a year on qualified equipment, may write-off up to $250,000 in 2010. The rules are designed for small companies, so the $250,000 deduction phases out when a business purchases more than $800,000 in one year. (Companies cannot write off more than their taxable income).
The benefit of a Non-Tax/Capital Lease is that it can take advantage of Section 179: expense up to $250,000 if the equipment is put in use in 2010. In addition, you may depreciate any excess on the depreciation schedule for that asset. Examples of Non-Tax/Capital Leases include a $1.00 Buyout Lease, an Equipment Finance Agreement (EFA), and a 10% Purchase Upon Termination (PUT) Lease. Example: Assume you finance business equipment, put it in use in 2010, and take advantage of Section 179. Your tax savings could be significant! |
