Get the Most From Your Section 179 Deductions and Save on Year-End Capital Investments

[fa icon="calendar"] October 07, 2020 / by TPM Admin

2020 is a challenging year by any measure. Many business owners and executives would like to put this year behind them and move on, but now is the time to carefully consider the year-end investment strategy that will put your business in the best position for success in 2021 and beyond.

Section 179 of the IRS tax code is one tool business owners may use to save thousands of dollars while investing in the machinery, office equipment, and software they need to keep their business moving forward. Section 179 may seem complicated at first, but essentially it allows a business to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. That means you can deduct the full purchase price from your gross income saving you thousands of dollars. See the example below:

 

2020 Section 179 Example Calculation

Cost of Equipment Purchases

$         1,150,000.00

Assumes a tax bracket of 35%

 

Section 179 Deduction

$         1,000,000.00

Bonus Depreciation Deduction (100% in 2020)

$           150,000.00

Normal 1st Year Depreciation

$                           -  

Total First Year Deduction

$         1,150,000.00

Cash Saving on Purchases

$           402,500.00

Lowered Cost of Equipment (after Tax Savings)

$           747,500.00

 

In this example the business owner saved $402,500.00 or 35% off the purchase cost.

(Always consult with your financial advisor on how section 179 applies to your business)

KEY TAKEAWAYS

  • Section 179 of the IRS Tax Code allows businesses to take an immediate deduction for business expenses related to depreciable assets such as equipment, vehicles, and software.
  • This allows businesses to lower their current-year tax liability rather than capitalizing an asset and depreciating it over time in future tax years.
  • Section 179 is limited to a maximum deduction of $1,040,000 and a value of property purchased to $2,590,000 for the year 2020

                Source:   https://www.section179.org/

Many of TPM’s partners offer special year-end promotional pricing and financing options. By combining these promotions with section 179 savings you can best maximize your investment dollars. Contact your TPM account manager today to find out what programs are available to you.

Wishing you the best in Q4/2020 and a great start to 2021,

John Wagner, MBA

Director of Sales – TPM Document & Print Solutions

Topics: Document & Print Solutions

TPM Admin

Written by TPM Admin

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