Section 179 Deduction Helps Manufacturers Implement Technology

Implementing technology for your company could benefit your bottom line.  An extension of The Small Business Jobs & Credit Act of 2010 provides key tax incentives for investments in new business equipment including accounting and manufacturing software. This legislation gives business owners additional tax deduction and depreciation opportunities through December 31, 2012.

The Tax Code Section 179 deduction for qualified equipment has recently been extended and increased to $500,000. This means businesses can write off up to $500,000 of qualified equipment within the 2010 and 2011 tax years. 

The Act includes:

• A 100% bonus depreciation deduction plus the normal accelerated depreciation on the balance of the cost. This benefit applies to qualified new equipment acquired and placed in service after September 8, 2010 and before  January 1, 2012.
• A 50% first year additional bonus depreciation deduction for  investments placed in service after December 31, 2011 and through December 31, 2012.

Qualified equipment under Section 179 includes:

• Computers and computer software (like Dynamics GP, Vicinity, BatchMaster; not custom written solutions)
• Equipment (machines, etc.) purchased for business use
• Tangible personal property used in business
• Business vehicles with a gross vehicle weight in excess of 6,000 lbs
• Property attached to the business building that is not a structural component of the building

Additional details:

• The deduction begins to phase-out dollar for dollar after $2 million of qualified equipment  purchased during 2010.  Equipment acquisitions totaling $2.5 million or more do not result in any Section 179 deduction.
• The maximum amount and phase-out thresholds for taxable years beginning in 2012 will be $125,000 and $500,000 respectively, indexed for inflation.
• $1 buyout leases and EFAs qualify for Section 179 benefits.
• This is not legal, tax,, or financial advice. You should consult with your tax advisor for the specific impact to your business.

If you care to comment on the information above or have any questions please feel free to contact me at 817-640-0016 x 109 or by emailing me at nphillippi@customis.com. 

Custom Information Services (CIS) is a Dynamics reseller in North Texas.