Benefits of Leasing: Tax Benefits
Save big when you lease equipment: decrease your taxable income
Leasing provides your company with substantial tax advantages you can’t achieve when you pay with cash or finance via a traditional bank loan. Don’t wait - maximize your tax benefit this year via the recently modified IRS Section 179 allowing businesses to write off up to $112,000 in leased equipment. Alternatively, write off 100% of each monthly lease payment as an operating expense throughout the entire term of the lease.Illustration of tax savings through IRS section 179. Compare taxes paid, highlighted in blue.
For illustrative purposes, assume taxable income of $125,000 for the following examples. Contact your tax advisor for further detail or visit www.irs.gov for specific detail.
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Tax Code Section 179 & Election to
Expense Detail The election, which is made on Form 4562, is for the tax year the property was placed in service. The total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income during the tax year. Section 179 property is property that you acquire by purchase for use in the active conduct of your business. Reference Publication 946 for eligibility. This expense deduction is provided for taxpayers (other than estates, trusts or certain non-corporate lessors) who elect to treat the cost of qualifying property as an expense rather than a capital expenditure. Under Section 179, equipment purchases, up to the amount approved for a given year, can be expensed (deducted from taxable income) if installed by December 31st. Non-Tax leases qualify for this deduction in their year of inception. Any excess above the expensed amount can be depreciated depending on the equipment type. Not all states follow federal law. All leases are subject to credit approval. |
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