What is the Section 179 Deduction?
Essentially, Section 179 of the IRS tax code is an incentive created by the U.S government to encourage businesses to invest in themselves, allowing them to elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year the property was placed in service.
January 1, 2016 – The “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) was passed by both the House and the Senate and signed into law on 12/18/2015.
This bill expanded the Section 179 deduction limit to $500,000.00.
“Section 179 Deduction: Until further notice, Section 179 is permanent at the $500,000.00 level. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out-dollar-for-dollar and completely eliminate above $2.5 million. Additionally, the section 179 cap will be indexed to inflation in $10,000.00 increments in future years.”
What is Bonus Depreciation?
“50% Bonus Depreciation will be extended through 2018. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017. Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.”
The PATH ACT passed in December of 2015 was made retroactive for the 2015 tax year, making the Section 179 deduction for 2015 $500,000.00. In addition, the 50% Bonus Depreciation was reinstated.”
Question: Is your practice purchasing less than $2M in medical equipment this year?
You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service.
What Property Qualifies?
To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify.
How Much Can You Deduct?
Your section 179 deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit.
Here’s a Simplified Breakdown
2016 Deduction Limit = $500,000
This deduction is good on new and used equipment, as well as off-the-shelf software, and must be financed/purchased and put into service by the end of the day, 12/31/2016.
2016 Spending Cap on equipment purchases = $2,000,000
Costs Exceeding $2,000,000
If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000.Basically, this is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
Let Us Help You
United Medical Instruments, Inc. has worked with our leading partner to offer an extremely low 3.9% interest for 60, 72, or 82 month financing options. That means you can have your new equipment in 2016, still qualify for your Section 179 Deduction.
Your Medicare reimbursements will have more than paid the equipment off by then. If you need a MRI or a new or used Ultrasound, now is the time to act. Request a quote today, or give us a call today at 877.490.7036
The Federal Government is currently threatening to raise interest rates, so we can’t guarantee that we can offer this leasing option with this low an interest rate even through the end of the year. So if you need a dedicated extremity MRI or a new or used Ultrasound machine at all, contact us immediately for a quote.
**The above statements should not be construed as legal or tax advice, please speak with your CPA before purchase to ensure that you do indeed qualify**