As the fiscal year draws to a close, it may be worth considering Section 179 to lower your tax burden for 2023.
To refresh your memory, Section 179 allows a business to deduct the full purchase price of certain equipment for the year it was put in service.
By deducting the full purchase price, it creates an initial expense deduction that is higher than the standard depreciation method, thereby lowering your tax liability.
A few observations about Section 179: The deduction can only be taken in the year that the equipment has been put into service, not when it was purchased. Considering the lead times we have been seeing for commercial equipment, it may be a stretch to have a recent purchase in operation by December 31st. But for those who purchased equipment earlier this year or even last year and the equipment is now up-and-running, Section 179 can be a welcome tax benefit for you.
Additionally, in order to take the Section 179 deduction, the business must be making a profit. This differs from the Bonus Depreciation allowance, which actually allows you to take the deduction, even if it creates a loss.
There are limitations on the type of equipment that Section 179 covers, but it includes most heavy equipment and machinery, some vehicles for business, and even computer equipment.
Section 179 allows you to write off up to $1,160,000 in 2023.
Bonus Depreciation is also an option, but differences apply in deduction limits, flexibility, business income, and asset coverage.
This is for informational purposes only. Acceptance Leasing and Financing Service is not a tax advisor. Consult your tax advisor for your specific situation.
If you’d like to learn more about Section 179 and how it can benefit you, feel free to contact us at 412 262-3225.
We are Acceptance Leasing and Financing Service, Inc. We are in our 31st year of business this year. Established in 1992, we pride ourselves on our Certified Leasing and Financing Professional designation. We are a member of SBCA and a frequent attendee of the BCMC tradeshows. We can provide financing for any new and, regardless of age, used equipment. We look forward to working with you.