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Benefits of a Non-Tax/Capital Lease
Business owners who buy capital equipment - equipment, computers, and other tangible goods, usually prefer to deduct the cost in a single tax year, rather than a little at a time over a number of years.The benefit of a Non-Tax or Capital Lease is that they can take advantage of Section 179 and expense up to the amount allowed for the year the equipment is installed. You may
depreciate any excess on the depreciation schedule for that particular asset. Examples of this type of lease include $1.00 Buyout and 10% Purchase Upon Termination (PUT) leases. Since tax situations differ, please consult a tax advisor about the specific benefits on your business. .
Tax Code 179
Deduction Calculator
Tax Code Section 179 & Election to Expense
The Hiring Incentives to Restore Employment (HIRE) act extends the increase in the Section 179 limit for initial year expensing to $250,000 (from $134,000). The Sec. 179 expensing election allows a current deduction for newly acquired assets that otherwise would have to be depreciated over a number of years. The HIRE act also extends the increase in the threshold at which the expensing election begins to phase out to $800,000 (up from $530,000). The higher limits apply for calendar year 2010 or a business's fiscal year that begins in 2010. A business can claim the expensing election only to offset its net income, not to reduce net income below zero.
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