Section 179 is An Opportunity for You
by Pete Rounds

Section 179

As 2016 winds down, many printers reflect back over the year and evaluate how profitable it was and whether there are steps they need to take to limit their federal tax liability. Often federal tax incentives are offered, allowing printers to utilize tax credits to spur investment in new capital equipment.

Section 179 of the IRS Tax Code is such an incentive. It allows businesses to deduct the full purchase price of qualifying equipment financed during the tax year up to $500,000. Please note this incentive only helps off-set tax liability for companies reporting a profit for 2016. If your company shows a break even result or a loss for the year this tax incentive will yield no benefit, as the incentive only offsets actual tax liability.

How does it work?

This would require some conversation with a company’s tax accountant to confirm specific details, as each situation may vary based on a variety of circumstances, including legal entity (corporation, Sub Chapter S, partnership, etc.) individual earnings and prior deductions.

Generally speaking, however, the current corporate federal tax rate is 35% of earnings, and any tax credit would be applied to earnings from that tax year. Under normal tax law capital equipment is depreciated over a set number of years, and this can vary by type of equipment and amount paid. A 3 to 5 year depreciation schedule is normal. Under Section 179, the full deduction for purchased equipment up to a specified dollar amount can be taken now, resulting in immediate savings on a corporation’s 2016 tax liability—dollars that you can reinvest into your business. In the case of capital equipment this tax credit can be used to cover some or all of the first year payments, or offset start-up costs, potentially providing a positive cash flow.

If you’re considering buying wide format equipment, there is no better time than now. Talk to your Athens’ representative to learn more.