Tax day may have come and gone, but it’s not too late to start planning for next year’s deductions. Along with a bevy of other new tax laws, businesses are now allowed to write off 100 percent of spending (up to $500,000!) on equipment and machinery purchased in 2011.
Paired with Projector People’s low prices on business projectors, the law is great news for businesses that have wanted to invest in technology but weren’t sure if the timing was right from a financial standpoint.
Now, instead of having to depreciate the investment over a number of years, companies can reap the benefits of upfront savings, as well as the ROI from improved communications through the implementation of cutting-edge technology.
How to save on business projectors
Under the new law, section 179 of the IRS code allows $500,000 as the maximum write-off for equipment put into use in 2011, up from last year’s $250,000.
Instead of writing off the cost of equipment over a period of five years through depreciation, section 179 allows businesses to write off the entire amount during the year they buy it. This creates the incentive to purchase equipment that a business needs now, instead of pushing back those acquisitions.
As one example of the money that can be saved, let’s say you purchase $650,000 worth of equipment this year. With the tax break, your total equipment cost is actually $422,500 (assuming a 35% tax rate).
Businesses that purchase, finance and/or lease less than $2 million in new or used business equipment during tax year 2011 qualify for the Section 179 deduction.
For most small businesses, the entire cost of equipment, software and vehicles up to $500,000 can be written-off on the 2011 tax return. The deduction was designed for small and medium-sized businesses, but large businesses that exceed the $2 million threshold can expense all qualifying capital expenditures through a bonus depreciation of 100 percent for the 2011 tax year.
To qualify for the Section 179 Deduction, the equipment and/or software purchased must be placed into service between January 1, 2011 and December 31, 2011, and the purchases must be used for business purposes more that 50 percent of the time.
Bear in mind that the advice given here is general in nature and subject to change. It is not intended to be construed as legal, accounting or tax advice. Please consult with your tax advisor to discuss the potential benefits of this subject matter and know which types of property do and do not qualify.