Pamela Hewett, a friend of mine who runs a company called PFC Finance, has been after me to remind my current and prospective clients of a little-understood provision of the IRS Tax Code called Section 179. After reviewing some docs Pamela sent to me and doing a little research on my own, I can see why she’s so enthusiastic about it. I’m NOT an accounting or finance person, so I’ll state this in layman’s terms as much as possible; please excuse if I’m being too elementary in my descriptions.
Basically, Section 179 has been expanded (or relaxed, depending on your perspective) by the IRS to boost capital expenditures during the Great Recession. How? By allowing qualifying capital expenditures to be ENTIRELY written off in the year they are acquired, instead of being depreciated over time as they usually would. Combine this with the availability of cheap money for financing & leasing of capital expenditures, and you’ve got a financial “perfect storm.” (In a good way, that is.)
In other words, a qualifying 2012 capex can be taken entirely to the bottom line as a tax deduction, even if you are paying for it over time. There are some limitations to Section 179 eligibility, but it generally pertains to capital goods purchased for use in the active conduct of a trade or business. (This includes all the products sold by Southern Data Storage.)
Now here’s the kicker; in 2012 the maximum deduction is $125,000 but in 2013 it goes down to $25,000. In other words, you have slightly less than two months to maximize this simple deduction.
If you want more info please contact me at the number at the top of this page, or by clicking “Contact” on the menu bar above and filling out the email form. I’ll be happy to get you in touch with Pamela and she can take you through the full benefits of utilizing Section 179 in 2012.
Even better news this year, Mark. Section 179 was adjusted for inflation to $139,000 in 2012.