Taking Advantage of Section 179
Businesses are always trying to minimize their tax liability. Under Section 179 of the IRS tax code, businesses that spend less than $450,000 a year on qualified equipment, can write off up to $112,000 of those purchases in 2007. The $112,000 deduction phases out when companies purchase more than $450,000 of qualified equipment in 2007. Please note the equipment must be put into use in 2007 and the total cost of equipment that may be expensed cannot exceed a businesses taxable income.
How a Non Tax Lease can minimize your tax liability
A major benefit of a Non Tax lease is that business can take advantage of Section 179 and expense up to $112,000 of qualified equipment that was put in use in 2007.
Let's look at an example:
Business A finances $100,000 worth of business equipment and puts it in use in January 2007 and is eligible to take advantage of the entire Section 179 deduction.
Compare tax benefit Section 179
| Section 179 | Traditional Depreciation (5 year depreciation schedule) |
|
| 1st Year deduction | $100,000 | $20,000 ($100,000/5) |
| 1st Year Tax Benefit (Assuming 35% tax Rate) | $35,000 | $7,000 |
*Please consult your tax advisor regarding any tax or accounting questions
