Tax Break Expires Soon. Take Advantage of 24 & 36 month 0% Leasing Programs.
As we enter the last month of 2005, time is running out for small businesses to take advantage of the benefits of the Tax Act of 2003. If your company has purchased information technology equipment this year, you’ll want to take note of this change. Section 179 – Temporary Code Expires 12/31/05.
The IRS Code Section 179 provides accelerated write-offs for capital equipment that small businesses purchase and own for tax purposes. Between now and December 31, 2005, businesses purchasing $400,000 or less in capital equipment during their 2005 tax year can deduct up to $100,000 of that expense on their 2005 tax return. This tax break won’t last long – next year, the capital expense limit will decrease to $200,000 and the available tax write-off will decrease to $25,000.
If your business acquires more than $400,000 in capital assets during the 2005 tax year, the deduction decreases by $1 for each dollar you spend over the capital expenditure limit. So, managing your company’s purchases is critical. Generally, any remaining purchase cost that cannot immediately be expensed under Section 179 may be depreciated using MACRS.
Growing Your Business? Leasing Can Help to Maximize Your Tax Benefits
Most businesses prefer to lease at least some of their information technology equipment, due to the flexibility and financial benefits that leasing provides. If you lease equipment, you could still be entitled to the benefits of Section 179 – in fact leasing might be the best way to preserve a growing company’s ability to take a Section 179 deduction on the first $400,000 of equipment it purchases this year. Equipment purchases exceeding that limit could jeopardize the amount of Section 179 write-off, if any, a company is eligible to take. However, by leasing equipment acquisitions that exceed $400,000, and allowing the leasing company to be the tax owner of that equipment, your company may be able to retain its Section 179 deduction. Using a tax lease to finance information technology equipment allows you to trade in un-used tax benefits in return for an overall lower cost of financing. Plus, depending on the structure, a lease could result in improved cash flow and financial statement ratios.
Sage Software and Key Equipment Finance Team Up To Offer 24 & 36 month 0% Leasing!
- 100% project financing includes all software and seats licenses provided by Sage Software, ClientCare, training and other services, and all Business Partner provided services. Optionally, customers can include other vendor software, hardware and services in the lease.
- Competitive rates and 12-60 month payment options.
- Easy one page application with quick approval.
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As a service to our clients, Axis Global Partners is providing this brief overview to raise client awareness and to help prepare clients for the impact of the changes discussed. The aforementioned represents the interpretations and comments of Axis Global Partners. Before entering into any equipment financing arrangement, please consult your own financial and legal advisors.