Is This Your Situation — Planning an Equipment Purchase?

One of the best tax breaks available to manufacturers is the Section 179 deduction, which allows you take a current deduction on equipment and business vehicles, rather than depreciating it over many years.

The maximum amount for 2013 is $500,000 (*see below for 2014). In order to qualify for the tax break, you must use the equipment more than 50 percent of the time for business.

Tip: Many business owners are involved in more than one venture. In the case of pass-through entities (partnerships, LLCs, and S corporations), the dollar limitation rules for the Section 179 deduction apply at both the entity level and the owner level. (IRS Regulation 1.179-2)

Therefore, advance planning may be necessary to maximize Section 179 deductions at the owner level, which is where the write-offs really count. Your tax adviser can provide all the details.

*Unless Congress acts to renew this at a higher level, this important provision has dropped in 2014 to only $25,000 spending allowance (down from $500,000 in 2013) with an overall threshold of only $200,000 (down from $2,000,000 in 2013).

There are restrictions. Contact us to ensure that you get the maximum equipment deduction allowed in your company’s situation.