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Tax BenefitsSignificant Tax Savings Due to IRS Changes!
Recent changes in tax laws allow you to expense up to $100,000 in new equipment purchases, if put into place prior to December 31, 2003. These changes include all depreciable equipment, even software.
Our 6 x $99 program allows you to expense your equipment purchase this year while making your first 6 payments at only $99 per month. Your regular lease payments will not begin until next year! Consider this example:
IRS Section 179
Under IRS Section 179, equipment purchases, up to the amount shown below, can be expensed (deducted from taxable income) if installed by December 31st. Finance leases qualify for this deduction in their year of inception.
Any excess above the expensed amount can be depreciated over 5 to 7 years depending on the equipment type.
The maximum amount of asset cost that can be expensed by year is:
1208. Election to Expense
Certain Depreciable Business Assets
An expense deduction is provided for taxpayers (other than estates, trusts or certain non-corporate lessors) who elect to treat the cost of qualifying property, called Sec. 179 property, as an expense rather than a capital expenditure. The election, which is made on Form 4562, is to be attached to the taxpayer's original return (including a late filed original return) or on an amended return filed by the due date of the original return (including extensions) for the year the property is placed in service and may not be revoked without IRS consent [94FED, 12 120]. Employees may make such election on Form 2016.
For 2006, the maximum Code Sec. 179 deduction is $100,000. The $100,000 ceiling is reduced by the excess cost of qualified property placed in service during the tax year over $200,000.
The total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income (determined after application of the investment limitation) derived from the active conduct of any trade or business during the tax year. Costs disallowed under this rule may be carried forward an unlimited number of years subject to the ceiling amount for each year. To qualify as Code Sec. 179 property, the property must be Code Sec. 1245 property depreciable under Code Sec. 168 and property that is acquired by purchase for use in the active conduct of a trade or business.
An enterprise zoned business (Code Sec. 1397B) is entitled to an increased Code Sec. 179 deduction. The standard $24,000 annual limitation is increased by the Lesser of (1) $20,000, or (2) the cost of section 179 property which is qualifies zone property placed in the service year.
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