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Why should you care about Tax Code 179?

You can deduct 100% of the cost of your new gas sterilizer from your 2020 gross income!

Andersen Sterilizers News  | NOVEMBER 11, 2020

IRS Tax Code Section 179 is an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves (text adapted from Section179.org).

It’s one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses could also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are taking action and getting real benefits.

Many people think the Section 179 deduction is some mysterious or complicated tax code. It really isn’t. Here are six quick facts to keep in mind for 2020.

Speak to your tax professional about how to take full advantage of Tax Code 179.

Tax Code Section 179 Facts 2020: 100% Deduction

100% Full Cost Deduction

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.

That means that if you buy a piece of qualifying equipment (including sterilizers and abators), you can deduct the FULL PURCHASE PRICE from your 2020 gross income. 

In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).

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.

And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year. This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179 to purchase needed equipment right now, instead of waiting.

Which Purchases Qualify?

Most tangible goods used by American small businesses, including “off-the-shelf” software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.

Capital equipment – including Andersen sterilizers and abators – is a popular category that qualifies under Section 179.

The equipment purchased must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction.

Tax Code Section 179 Facts 2020: Capital Equipment
Tax Code Section 179 Facts 2020: Deduction Limit $1,040,000

Deduction Limit

Section 179 does limit the total amount that can be written off – $1,040,000 for 2020.

All businesses need equipment on an ongoing basis, be it machinery, computers, software, office furniture, vehicles, or other tangible goods. It’s very likely that your business will purchase many of these goods during the year, and will do so again and again. Section 179 is designed to make purchasing / leasing that equipment during this calendar year financially attractive.

Talk to your tax professional about the benefits of lowering your 2020 gross income by writing off the cost of your new Andersen Sterilizer and other tangible business needs from 2020!

Deadline

To qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2020 and December 31, 2020.

That means your Andersen sterilizer and/or abator must be up, running and benefiting your practice by year-end in order to qualify for deduction.

Tax Code Section 179 Facts 2020: Use by Dec. 31
Tax Code Section 179 Facts 2020: Equipment Spending Cap $2,590,000

Equipment Spending Cap

Section 179 limits to the total amount of the equipment purchased – $2,590,000 in 2020.

The deduction begins to phase out on a dollar-for-dollar basis after $2,590,000 is spent by a given business (thus, the entire deduction goes away once $3,630,000 in purchases is reached).

This makes it a true small and medium-sized business deduction.

100% Bonus Depreciation

Bonus depreciation is offered some years, and some years it isn’t. In 2020, it’s being offered at 100%. This year new and used equipment qualify for both the Section 179 Deduction (as long as the used equipment is “new to you”) and Bonus Depreciation.

Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,590,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.

When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.

Tax Code 179 & Andersen Sterilizers

Now that we’ve de-mystified Tax Code Section 179, what does it all mean in reference to Andersen Sterilizers? We’re so glad you asked.

Tax Code 179 + Trade-in-credit

No matter your feelings on taxes, paying less is good.

Put Tax Code 179 to work for you:

Purchase & begin using your Andersen sterilizer before 12.31.2020
+ Write off 100% of the cost from your 2020 gross income

Congratulations on putting your taxes to work for your business – enjoy your new gas sterilizer and savings!

Tax Code 179 Andersen Model Breakdown 2020
Upgrading your existing Andersen Sterilizer to a new one?
Receive an additional $500 trade-in-credit!

2020 Tax Code 179 Incentive Savings Break Down*

2020 Andersen Tax Section 179 Incentive Savings Break Down

*Assuming a 21% tax bracket for C Corporations.
Pass-through tax rates vary on the tax payer
(contact your tax professional to confirm your savings).

So what do I do next?

Contact your tax professional for full details on how to take advantage of this little-known small business powerhouse. Or contact us!

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