Businesses can deduct the full purchase price of any FleetBoss GPS system equipment purchased or financed during the tax year…
Want to equip the rest of your fleet with a FleetBoss system before the end of the year? When you invest in FleetBoss GPS Fleet Management, odds are good that you’ll qualify to receive a generous tax break designed specifically to help companies invest in technology and their business. courtesy of Section 179.
What is the Section 179 Deduction? The good news is Section 179 Deduction is not some arcane or complicated tax code. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the US Government to encourage businesses to buy equipment and invest in themselves.
Section 179 works like this: When your business buys certain pieces of equipment such as a FleetBoss vehicle unit, it typically gets to write it off a little at a time through depreciation. In other words, if your company spends $50,000 on a vehicle, it gets to write off $10,000 a year for five years (these numbers are only meant to give you an example and are not accurate figures.)
Now, while it’s true that this is better than no write off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting. That’s the whole purpose behind Section 179.
Limits of Section 179: Section 179 does come with limits – there may be caps to the total amount written off, and limits to the total amount of the equipment purchased. The deduction begins to phase out dollar for dollar after a certain amount, so this makes it a true small and medium-sized business deduction.
It is important to remember that businesses exceeding the deduction limit can take a bonus depreciation
on the amount that exceeds the limit as well as take the normal depreciation on the rest.
Who Qualifies for Section 179? All businesses that purchase or finance less than $800,000 in business equipment should qualify for the Section 179 deduction. In addition, most tangible goods qualify for the Section 179 deduction. To qualify for the Section 179 deduction; the equipment purchased must be placed into service between January 1 and December 31. The deduction begins to phase out if more than $800,000 of equipment is purchased and downscales to a dollar for dollar scenario,
Leasing and Section 179: FleetBoss offers several financing programs to any business wishing to add on or finish their fleet by year end. Businesses wishing to finance can still take full advantage of the Section 179 deduction. In fact, leasing equipment with the Section 179 deduction in mind is a preferred financial strategy for many businesses as it can significantly help not only with cash flow, but with profits as well.
Non-Tax | Capital Lease: One of the more popular financing programs are the many options of the non-tax capital lease which allows you to take full advantage of the Section 179 deduction while making smaller payments. With a non-tax capital lease you can acquire and write off $250,000 worth of equipment this year, without actually spending $250,000 this year. A small business that is managing cash flow can leverage a non-tax capital lease and still take the Section 179 Deduction.
Examples of non-tax capital leases include a $1.00 Buyout, and a 10% Purchase upon Termination (PUT) Lease. In many cases, the amount you save in taxes will be MORE than the total of your first year’s payments.
Equipment Financing: You may also obtain your FleetBoss system using an Equipment Finance Agreement (EFA) and still take the Section 179 Deduction.
Advantages of Leasing and Financing: The obvious advantage to leasing or financing equipment and then taking the Section 179 deduction is the fact that you can deduct the full amount of the equipment, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction. Yes, you are reading this correctly – in many cases the deduction will actually be profit.