| Leasing equipment is a great way for business | | | | consist of business vehicles, computers, software, |
| owners to obtain new, needed business equipment. | | | | office furniture, and office equipment. Further, large |
| Leasing offers real advantages to a business’s | | | | manufacturing equipment and tools can also be |
| bottom line as the full amount of the lease, including | | | | expensed under this IRS Code Section. |
| shipping costs, installation charges, and maintenance | | | | With this deduction, a business can write down up to |
| fees can all be included in the lease and paid out over | | | | $250,000 in capital expenses against its annual income |
| time - less out of pocket, up front expenses. Further, | | | | – even if it does not pay the $250,000 up front. |
| leasing can mean lower monthly payments over | | | | This write-off of $250,000 is for this year (2008) |
| traditional bank financing. Can also be used for new | | | | only. In 2009, the amount resorts back to the normal |
| businesses or for business owners with poor credit. | | | | $150,000. Further, the write down has to be in the |
| And, | | | | year the equipment was acquired – no carry |
| Lastly, leasing, combined with IRS Code Section 179, | | | | forward. |
| can reduce your company’s income taxes by an | | | | Reducing your business income, means reducing the |
| amount greater than the total amount of your first | | | | amount of income taxes your business pays. Lower |
| year’s lease payments! | | | | tax burden, higher profits! |
| According to “The obvious advantage to leasing or | | | | Before Section 179, a company could only deduct or |
| financing equipment and then taking the Section 179 | | | | depreciate a small portion of the cost of equipment |
| Deduction is the fact that you can deduct the full | | | | each year; dolling out the cost savings over many |
| amount of the equipment, without paying the full | | | | years. Under Section 179, a business can deduct the |
| amount this year. The amount you save in taxes can | | | | entire amount, up to the $250,000 limit in the first |
| actually exceed the payments, making this a very | | | | year. Think about this: You deduct, under the old |
| bottom-line friendly deduction.” | | | | rules, a $200,000 piece or pieces of equipment at |
| How this works: | | | | 20%. That amounts to a $40,000 reduction in taxable |
| The lease has to be a non-tax capital lease, meaning | | | | income or, at a 35% tax rate, a $14,000 increase in net |
| that the leased equipment must be capitalized and | | | | income. On the other hand, deducting the entire |
| shown on the company’s balance sheet. | | | | amount reduces taxable income by the $200,000 |
| However, these leases still come with all the benefits | | | | purchase amount, resulting in, at 35%, a $70,000 boost |
| of leasing like those mentioned above (less | | | | in profits! |
| out-of-pocket expenses and lower monthly | | | | Combine the Section 179 deduction of $250,000 for |
| payments). Further, the equipment has to | | | | 2008 and a struggling economy where equipment |
| ‘qualify.’ Qualifying equipment includes: most | | | | manufacturers and vendors are reducing prices, this is |
| equipment (and machinery) for business use. Can | | | | the perfect time to obtain new business equipment. |
| also be personal equipment used in the business. Can | | | | Do not let this opportunity pass you by! |
