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Anyone who owns a small business should know that the IRS tax code is designed to benefit them.[1][2] The government wants to incentivize people who start new businesses and invest in them. Entrepreneurs contribute to the GNP and in many cases, they also create jobs for others in their communities. From the government’s perspective, both of these activities should be encouraged. One other important economic activity businesses perform is acquiring equipment. This creates demand from other producers in the economy.
For example, when a general contractor buys a truck, that’s good news for a local dealership. Typically, people will also finance vehicle purchases rather than paying in full upfront. That means another local business in the financial sector has also found a customer. Finally, the contractor is now driving a newer, more fuel-efficient, and likely safer truck. Those qualities mean that the purchase benefits them personally, and arguably the whole community.
Because the federal government wants to encourage this kind of economic activity and the positive effects that it has, they provide incentives in the tax code.[1][2] One of the most important incentives is outlined in Section 179 of the IRS tax code.[1][2] Section 179 makes it possible for taxpayers to deduct up to $1 million spent on equipment AND machinery for their businesses.
This is a very broad specification. Businesses can deduct equipment like trucks, refrigerators, computers, software, ovens, conveyor belts, and more. The inclusion of real property in Section 179 means that improvements to buildings can also be deducted.[2] The only other requirement to claim a deduction is that the items or improvements must be used during the tax year for which they’re being claimed.[1]
At Alliance Leasing, we help businesses finance the equipment they need to produce and deliver for their customers. We’d love to help you and your company upgrade your equipment, put it into service, and qualify for a Section 179 deduction IN 2020. Contact us today and let us know what you’re looking for. We finance an extensive list of equipment for retailers, educators, manufacturers, medical providers, and more.
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