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IRS Section 179

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The Small Business Jobs and Credit Act of 2010 Increases Tax Benefits Through December 31, 2011!

On September 27, 2010, Congress passed The Small Business Jobs and Credit Act of 2010 which expanded the Section 179 benefit:

  • Increases the Section 179 deduction to $500,000 (up from $250,000).
    This means that if your customer buys (or leases) a piece of qualifying equipment, they can deduct up to $500,000 of the purchase price from their gross income.
  • Increases the total amount of eligible equipment purchased to $2 million (up from $800,000).
    This means your customer can purchase more equipment and still have the benefit of the Section 179 deduction.
  • Extends the "50% bonus depreciation" to tax year 2010 (it was rescinded at the end of 2009, but has been restored.)
    For equipment purchases over the Section 179 deduction of $500,000 your customer can deduct an additional 50% of the overage in addition to the standard depreciation deduction.
  • Extends Section 179 Benefits through December 31, 2011.

What does this mean for you?

The tax incentives for purchasing new equipment have never been greater. By offering your customers a lease to purchase option, the amount they save in taxes could be greater than what they pay in the first year of a lease. Their new equipment would make them money from day one!

Example: Equipment Cost of $600,000

First year write-off:            $500,000
$500,000 is the max. Section 179 write-off

Total 1st Yr Deduction: $560,000
$500,000 + $50,000 + $10,000 = $560,000

50% Bonus Depreciation:    $50,000
On remaining value:
$600,000 - $500,000 = $100,000
$100,000 x 50% = $50,000 		Tax Savings
Assuming Rate of 35%: $196,000
$560,000 x 35% = $196,000
Normal 1st Yr Depreciation: $10,000
Depreciation calculated at 5 years = 20%
$50,000 x 20% = $10,000 		1st Yr Net Cost
After Tax Savings:        $404,000
$600,000 - $196,000 = $404,000

Or Calculate Your Customer's Deduction

Cost of Equipment: $
       
Section 179 First Year Write-Off: $
50% Bonus Depreciation:
(On any remaining amount above $500,000)		 $
Normal First Year Depreciation:
(Depreciation calculated at 5 years = 20%)		 $

Total First Year Deduction:
(Add Section 179 Deduction, Bonus Depreciation
and First Year Depreciation)

 $
Tax Savings on Equipment Purchase:
(Assuming a 35% tax bracket)		 $
First Year Net Cost after Tax Savings: $

*Credit and equipment restrictions apply. This program does not assume the customer is eligible to take advantage of the IRS Section #179 depreciation schedule which allows rapid first year depreciation of certain assets acquired. The amount of previous depreciation they may have used may affect their ability to utilize the elections. The customer should consult their tax advisor or accountant for additional information. The data and descriptions above are presented for informational purposes only.  Neither Marlin Leasing Corporation nor any of its affiliates are tax advisors or consultants.

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