Section 179 Is Really Ending

By Lloyd Graff

Shameless Plug for Graff-Pinkert’s 8-32 Euroturn

Business owners, “the moving walkway is now ending.” The punch bowl is being pulled away. Section 179 of the United States Tax Code will essentially evaporate December 31 of this year. It is really going to end, and you are going to kick yourself if you blew big money by not taking advantage of the best goodie package the awful Feds have provided in decades.

This is really quite important for any small business that needs a truck, crane or parts cleaner. Even a screw machine or a hundred iPads. If you are making money or even if you are not, Section 179 allows you to deduct the expenditure of up to $500,000 with bonus depreciation on expenditures up to $2,000,000 of new or used capital equipment or software from your gross income in 2013.

Last year our Graff-Pinkert machine tool business bought long needed cleaning equipment for the shop from Graymills Corporation, which has easily paid for itself by speeding up output of cleaned machinery components. This year we will buy more cleaning and painting equipment. Section 179 does not differentiate between new and used equipment as past depreciation rules have done.

Graff-Pinkert is seeing a pickup in machinery buying at the moment. Section 179’s impending demise seems to be in play.

This blog is potentially self-serving if it stimulates machine sales for Graff-Pinkert and ad sales for Today’s Machining World. (Would that be so terrible?) The idiots in Washington have hammered small business so mercilessly for years, I feel fully justified in promoting the use of this finite tax benefit.

I would like to see Section 179 continue indefinitely, but with the political death squeeze going in Washington between the two parties it will not happen.

Business folks, you have 45 days to take advantage of this tax provision.

For more information check out www.section179.org/.

Question: Do you plan on purchasing anything because of Section 179?

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5 thoughts on “Section 179 Is Really Ending

  1. AvatarJosh

    I definitely think 179 was a boon to the manufacturing industry for the past several years. I know we have made several investments in machines and taken advantage of it and beyond that I’m certain it was involved in the purchasing decisions of several machines which we sold over the last years. It is sad to see it go.

     
  2. AvatarNaseer

    Two questions about Section 179: Does a company have to take delivery of and put the equipment in use to take advantage of the depreciation rule? And if marketing expense are covered, when does the advertisement have to run by?

     
  3. Lloyd GraffLloyd Graff

    Naseer, the law says you must put the equipment into service, though that may be difficult to prove. But you really need to have it in your shop by December 31. Regarding marketing, that is an expense any way you slice it.

     
  4. AvatarJim Goerges

    Section 179 is a wonderful tool if you need equipment and you are profitable. I don’t think it is wise to buy something if you don’t need it, otherwise your capital is not giving you a return on your investment and what happens if you have different needs 6 months down the road. Remember all section 179 does is excellerates depreciation. So you pay less taxes in early years of useful life of the asset, and pay more taxes in the later years of asset life. Your production needs determine if you need an a new machine, and your financial condition should be used to determine if you should use section 179 for tax purposes.

     
  5. AvatarNaseer

    Hi Lloyd, Thanks for the answer. I was afraid that was the case. Now I just have to get this particular manufacturer to deliver before Dec. 31…!!!

    It’s interesting but that Section 179 has not circulated or sunk in to many SMB’s. I wish more owners would get a little more anxious to get what they’ve been considering… Not just “stuff” but productivity tools! IMHO, many are still in the “I gotta have it, but let me see how long I can hold out without it because of the bad weather out there!”

    But what Jim said just prior fully applies as well. Don’t just buy things to save on taxes!!!

     

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