Tax Code Section 179
Section 179 (also known affectionately as the “SUV tax loophole” and the “hummer deduction”) basically allows a business entity to deduct the full purchase price or financing cost on equipment that meets the qualifying criteria for that particular tax year.
Just to be clear that would mean that the full purchase price of said qualifying equipment will be deducted from your annual gross income. This program was initiated by the US government in the hopes of spurring a surge of patriotic investments by the people, for the people’s government. As the pet name implies, many businesses do in fact utilize this opportunity for new vehicle purchases.
So let’s break it down a little more shall we?
Usually when a business entity purchases a piece of qualifying equipment, it gets to write off the purchase price in smaller portions over some number of years. For example: your business purchases a $30,000 piece of equipment and then would be allowed to write off $3,000 every year until the whole price is covered. (just an example).
Naturally the spending that you plan to write off has a cap. For the year 2009 you can write off a total of $250,000. And then the limit on total equipment spending is $800,000. Now if you do exceed the deduction limit of $250,000 then you’re offered a bonus 50% depreciation on that which exceeds the limit. You’ll still be awarded the normal depreciation on the initial write off.
This program was offered with small and medium sized businesses in mind. Don’t wait to take advantage of the no-brainer of the year. Need to know a little more, or how about a free section 179 calculator online? To use a free tax calculator, visit TurboTax Online.