If you have been considering investing in new equipment or software for your business, 2011 is the year to do so. With only a few weeks left in the year, time is running short for you to take advantage of what could be a substantial tax savings for 2011.
If you’ve been in business any length of time, you probably already know something about Section 179 of the IRS Tax Code. Section 179 allows businesses to deduct the full purchase price of qualifying equipment or software purchased or financed during the tax year — provided the equipment is put into service the same year as the deduction is taken. Most importantly, the incentives in the recent Stimulus Bills are advantageous for both small and large businesses when it comes to Section 179 deductions.
Ordinarily, businesses depreciate equipment over a period of years, allowing for a small bit of tax relief each year. Most business owners would prefer to deduct the entire purchase price of equipment from their gross income in the same year it was purchased, and Section 179 allows businesses to do just that.
But what makes Section 179 special for 2011? For the 2011 tax year, limits have been raised substantially. The deduction limit for 2011 is $500,000 (up from $250,000) and the 2011 limit on equipment purchases has been raised to $2,000,000 (up from $800,000).
The investment in new equipment or software is something that most businesses carefully consider, and often delay because of the cost. However, with the new limits in effect for the 2011 tax year only, an investment in new equipment or software should be a serious consideration before the year comes to a close. Limits will return to their previous levels in 2012.
Even though Lieberman Technologies is not in the business of offering tax advice, we wanted to bring this unique opportunity for tax savings to your attention. For tax advice or further information, we recommend you contact your accountant. To invest in new computers, servers, or software, contact Lieberman Technologies.
For more information on Section 179: http://www.section179.org/section_179_deduction.html
To calculate deductions under Section 179: http://www.section179.org/section_179_calculator.html