Why, because for the last two years Congress has instructed the IRS to allow very large one year depreciation of equipment and software. In most cases the amount you deduct will exceed your cash outlay for a year as long as you use a qualifying equipment finance agreement or lease.
December 31, 2012 is the last day to claim significant tax incentives to buy equipment for your business.
These incentives affect oil field equipment service companies, food manufactures, medical and dental offices and other companies that have significant capital equipment on their books.
Software purchased and installed in 2012 will also qualify for the large accelerated depreciation.
We have a list of the kind of equipment and software that we have had a great deal of success with, on our equipment finance page. Recently we have begun financing equipment used in the Eagle Ford Shale area of Texas.
There are a number of tax changes that will take place on December 31, 2012.
Most of these incentives were put into place as a part of the Obama stimulus plan several years ago.
The first tax incentive set to expire relates to the IRS section 179 accelerated depreciation program. On December 31, 2012 it will drop from $560,000 to $25,000. This is a big incentive for manufactures to buy (or lease with $1 buyout options) as long as the equipment is placed into service before December 31, 2012
There is a second “bonus” depreciation that companies that have put equipment or software into service in 2012 can take. You will be able to take an additional 50% bonus depreciation on the adjusted basis of qualifying equipment or software.
These two tax incentives have been on the books for several years, yet many companies have not been able to take advantage of them. If your company is growing and you anticipate needing additional equipment or software, make sure you buy it and put it into service before December 31, 2012.
If you have questions, please feel free to call Business Finance Solutions at 512.990.8756.