Businesses seeking to increase deductions by acquiring machinery and equipment before year-end have an impressive array of tools to work with:
- Generous, up to $500,000, expensing under IRC Sec. 179,
- A liberal, up to $2,500, expensing safe harbor for small businesses, and
- First year 50% bonus depreciation.
The bonus depreciation also applies to leasehold improvements, which include the cost of interior qualified improvements to non-residential property after the building is placed in service. In addition, the IRC Sec 179 expense deduction is allowed for qualified leasehold property, qualified restaurant property and qualified retail improvements.
On top of that, the Sec 179 allowance applies to off-the-shelf software and air conditioning units (but not residential rental air conditioning).
Armed with these tools, and careful planning, a small business has the opportunity to legally manipulate the taxable profit of the business. However, to accomplish that end, all the machinery, equipment and improvements must be purchased and placed in service before the end of the year.
If you need assistance planning your year-end purchase strategy to minimize your 2016 tax liability, contact the experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
