Section 179 of the Internal Revenue Code has provided for first year expensing of equipment for many years. In 2003 the amount allowed was drastically increased and in 2008 and 2009 under stimulus legislation passed by Congress the regulations have allowed up to $250,000 per year of new equipment purchases to be directly expensed for federal income tax purposes. This of course has allowed businesses to purchase new equipment and save the tax on this “instant depreciation” in a single year instead of the normal life of the equipment.
The resulting cash flow boost means that a lot of the cost is recovered in tax abatement immediately. It isn’t too late to get some of these benefits on your equipment additions.
As of the end of 2009, barring any legislation to change it, the first year writeoff will drop to $134,000. That is not as good as 2008 and 2009, but is considerably better than the $25,000 that is scheduled to come into play in 2011. When you calculate the interest savings on the earlier receipt of the tax benefit, it makes lots of sense to buy your equipment while you can take advantage of the higher expensing limits.
The election applies to new and used equipment. If you are in the market for recycling equipment, contact Unlimited Resources Corporation right away. Not only will we give you the best value for your dollar, your Uncle Sam will help defray the cost of it in tax savings.
If you didn’t buy that needed equipment last year, don’t put it off too long or you will be faced with multiple year depreciation for most of your large equipment purchases.