Tax Code Section 179 is Use It or Lose It!
It’s not too late to take advantage of the Section 179 tax deduction. So if you are even considering the purchase of software (Exscribe Orthopaedic Products) or new equipment, now would be a great time to make that investment. The maximum deduction for Section 179 in 2016 is set at $500,000 for these purchases. This varies each year and once it’s gone – it’s gone.
The following illustrations have been provided by our friends at GSC Capital:
Practices typically want to REDUCE INCOME TAXES
- To reduce taxes practices either reduce revenues or increase expenses
- It is unlikely that practices want to reduce revenues… So increasing expenses is the logical option
- BUT, how does a practice increase expenses but not use any of their cash?
- Depreciation is how….Tax Code 179 is just using depreciation more effectively
- Tax Code 179 allows a business to fully depreciate (i.e. expense) the cost of the equipment/software in the year they purchase it
- Depreciation is the expense a practice takes for purchasing and using equipment/software
- Depreciation is one of those rare expenses that DOES NOT require a practice to use money from their bank account
- Normal expenses like payroll, health insurance and rent are paid with actual cash out of the practice’s bank account
Tax Code 179 REDUCES the effective COST of the Equipment/Software (as an example)
- Equipment/Software Quote = $100,000
- Practice’s Estimated Tax Rate= 35%
- $100,000 * 35% = $35,000 in 2016 income tax savings
- Therefore, a $100,000 piece of equipment less the tax savings of $35,000 equals net project cost of $65,000.
Physicians can EARN MORE CASH in 2016
- Practice purchases equipment/software in 2016
- Practice finances the equipment/software through GSG
- GSG requires NO $$ down and defers the start of the practice’s payments until late 2016
- Taking the Tax Code 179 Tax Deduction Now with No Money out of pocket for the purchase of the equipment/software in 2016 means….
- Physician owners can take the extra $8,750 in cash (tax savings from example above) out of the business in form of extra bonuses or pay. They make more MONEY.
For more information contact Bill Steuer or Todd Greenberg at GSG Capital, LLC
Let Bill or Todd run a quick Tax Code 179 Analysis to show the potential savings available for your practice.
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Alpharetta, GA 30022
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