Small Business Jobs/Credit Act Increases Tax Benefits Through 2011!

By November 16, 2010Financing

On September 27, 2010, Congress passed The Small Business Jobs and Credit Act of 2010 which expanded the Section 179 benefit:

  • Increases the Section 179 deduction to $500,000 (up from $250,000).
    This means that if you buy (or lease) a piece of qualifying equipment, you can deduct the up to $500,000 of the purchase price from your gross income.
  • Increases the total amount of eligible equipment purchased to $2 million (up from $800,000).
    This means you can purchase more equipment and still have the benefit of the Section 179 deduction.
  • Extends the “50% bonus depreciation” to tax year 2010 (it was rescinded at the end of 2009, but has been restored.)
    For equipment purchases over the Section 179 deduction of $500,000 you can deduct an additional 50% of the overage in addition to your standard depreciation deduction.
  • Extends Section 179 Benefits through December 31, 2011.

What does this mean for you?

If you lease a piece of qualifying equipment with Marlin Leasing, you can deduct up to $500,000 of the equipment price without paying the full amount this year.

In fact – the amount you save in taxes could be greater than what you pay in the first year of a lease. Your equipment is making you money from day one!

Example: Equipment Cost of $600,000

First year write-off:            $500,000
$500,000 is the max. Section 179 write-off
Total 1st Yr Deduction:  $560,000
$500,000 + $50,000 + $10,000 = $560,000
50% Bonus Depreciation:   $50,000
On remaining value:
$600,000 – $500,000 = $100,000
$100,000 x 50% = $50,000
Tax Savings
Assuming Rate of 35%: $196,000

$560,000 x 35% = $196,000
Normal 1st Yr Depreciation: $10,000
Depreciation calculated at 5 years = 20%
$50,000 x 20% = $10,000
1st Yr Net Cost
After Tax Savings:         $404,000

$600,000 – $196,000 = $404,000