section 179 tax savings for 2013

[Mikey P]

Anybody got any knowledge on this section 179 tax savings for 2013?
http://www.crestcapital.com/tax_deduction_calculator

http://www.section179.org/section_179_deduction.html

 

[Ken Snow]

Lots Mikey, what specifically are you trying to find out. In its most basic form the section 179 accelerated depreciation allows a business to to depreciate an asset faster than the normal irs allowance so you can have a larger present day deduction for taxes. Ultmiately you don't save any long term as you then do not have the deductions in the following years. Talk to your cpa to determine your use of it.

 

[dealtimeman]

And if your current CPA doesn't have good ideas try multiple CPA to see other possible strategies that fit what you are doing or could be doing

 

[J Scott W]

One reason for section 179 was to encourage the sale of equipment and thus stimulate the economy. Section 179 is schedule to expire at the end of the year (2013). There is debate over renewing the program for future years.

Being able to deduct all of the cost of equipment up to $500,000 really helps cleaners buy equipment by saving on the taxes for the year of the purchase rather than having the deduction spread over 7 years.

 

[Ken Snow]

Scott- I believe as it is scheduled currently the accelerated depreciation amount cap for 2014 is $25,000 unless the higher level gets extended again.

 

[Mikey P]

One reason for section 179 was to encourage the sale of equipment and thus stimulate the economy. Section 179 is schedule to expire at the end of the year (2013). There is debate over renewing the program for future years.

Being able to deduct all of the cost of equipment up to $500,000 really helps cleaners buy equipment by saving on the taxes for the year of the purchase rather than having the deduction spread over 7 years.

not clear as to why all at once would be better than over the seven years?

 

[Ken Snow]

All it does Mike is give a larger present day reduction in taxable income for the owners- over the long term it has minimal to no effect and if done improperly can even increase tax burden in later years if taxable income becomes much higher and the deduction isn't available potentially putting someone in a much higher tax bracket, especially if the following years are banner years and the eligible year was not. It is a balancing act that a tax adviser should be involved in.

 

[Shane Deubell]

not clear as to why all at once would be better than over the seven years?

Limitless reasons but a couple might be if you bought a lot of equipment in a short time span, maybe 3 vans and take 1 now and other 2 over the long term. If you had a huge profit year that was abnormal, like say a couple major floods that kicked you into another bracket.

Lets say you usually make $100k a year over 5 years and then this year make $261k, well you would get whacked pretty hard on taxes.
Depends on your long term growth plans also, what if you plan on making an even bigger purchase next year, or several.

Definitely not an expert... think i average 1 battle a year with some taxing authority over the last 15 years. Can't stand them.