IRS Section 179 Capital Equipment Deduction
Owning a small business is costly, and the government is providing tax deductions for those who qualify, making the financial burden a little less heavy. Section 179’s Capital Equipment Deduction is aimed at helping small business owners get their feet off the ground and running, providing assistance with funding the purchase of equipment. While planning your finances for your new restaurant, it pays to become familiar with Section 179 in order to assist you with making smart capital investments.
Section 179 essentially allows businesses including restaurants to deduct the full purchase price of qualifying equipment during the financial tax year. This equipment can be either leased or bought outright, and it can be deducted at full purchase price from your gross income. Today, Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses.
What used to happen was that businesses could write off equipment but at a depreciated value rather than the full value at the time of purchase. With Section 179, your businness can write off the full value of equipment (totalling less than $25,000), which means that you may in fact choose to purchase more equipment because that political doorway is now open to your financial benefit!
Section179.org goes into more detail about the limitations:
Section 179 does come with limits - there are caps to the total amount written off [$25,000 for 2014], and limits to the total amount of the equipment purchased ($2,000,000 in 2013). The deduction begins to phase out dollar-for-dollar after $2,000,000 is spent by a given business, so this makes it a true small and medium-sized business deduction. After passage of the 'American Taxpayer Relief Act', large businesses that exceed the threshold of $2,000,000 in capital expenditure can take a Bonus Depreciation of 50% on the amount that exceeds the above limit.
While 2014 totals are much less than previous years, it can still help boost the capital for small businesses. The obvious advantage to leasing or financing equipment and/or software and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. So not only will you be making a well-planned financial decision, but it will also be economically-minded! You can elect for this deduction quite simply, so head over to Section179.org for the how-to!