2020 YEAR-END TAX DEDUCTION – DON’T MISS OUT ON HUGE SAVINGS $$$!
IRS Section 179 Deduction Benefits
Using the IRS Section 179 tax deduction for small businesses, business owners may deduct up to $1,040,000 in qualifying equipment purchased, leased, or financed in the calendar year 2020*.
This is a great opportunity don’t miss out.
Add to your fleet or replace and upgrade aging equipment with considerable tax savings!
100% bonus depreciation is also available on any new unit purchases placed in service prior to January 1st, 2021.
Alliance Bus Group Team
*To qualify for the 2020 tax deduction, equipment must be financed/purchased and put into service before the end of the day on December 31, 2020.
Section 179 FAQ
What is the Section 179 Deduction?
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It is an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. Section 179 is more beneficial to small businesses than ever. It is one of the few government incentives available to small businesses.
How can Section 179 help my bottom line?
Section 179 is the current IRS tax code that allows you to buy qualifying Â vehicles and deduct up to the full purchase price (including any amount financed) from your gross taxable income if purchased before December 31, 2020.
That means that if you buy a piece of qualifying equipment and products, you may be able to write off up to the FULL PURCHASE PRICE from your gross taxable income.
Does the date of my purchase have an impact on the Section 179 deduction?
Yes. To qualify for the Section 179 tax deduction for the 2020 tax year, your vehicle must be purchased or leased and placed into service by December 31, 2020.
How does Section 179 work?
In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation.Section 179 allows your business to write off the entire purchase price of qualifying equipment for the current tax year. Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2020 tax return (up to $1,040,000).
You can use the Section 179 Deduction Calculator to instantly know how much money you’ll save when you lease or buy equipment this year by clicking here.
What Business Vehicles Qualify for the full Section 179 Deduction?
Because many vehicles can serve business and personal function both, the rules for business vehicle deductions are always evolving, and can be complicated. It’s easier to list the typical vehicles that will generally qualify for a full section 179 deduction, and then discuss the rules for other vehicles.
Many “work vehicles” that, by their nature, are not likely to be used for personal purposes will usually always qualify for full Section 179 deduction. This includes the following vehicles: vehicles that can seat nine-plus passengers behind the driver’s seat (i.e.: shuttle buses).
What are the limits of Section 179?
There are caps to the total amount written off ($1,040,000 for 2020), and limits to the total amount of the equipment purchased ($2,590,000 in 2020). The deduction begins to phase out on a dollar-for-dollar basis after $2,590,000 is spent by a given business. Therefore, the entire deduction goes away once $3,630,000 in purchases is reached.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2020 should qualify for the Section 179 Deduction (assuming they spend less than $3,630,000).
Most tangible goods used by American businesses, including off-the-shelf software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction. To qualify for the Section 179 Deduction, the equipment purchased or financed must be placed into service between January 1, 2020 and December 31, 2020.
For 2020, $1,040,000 of assets can be expensed; that amount phases out dollar for dollar when $2,590,000 of qualified assets are placed in service.
What’s the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is offered some years, and some years it isn’t. Right now in 2020, it’s being offered at 100%. The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,590,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation, unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
What is Section 179’s “More Than 50 Percent Business-Use” Requirement?
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.
Other Important Details:
- To qualify for Section 179, the vehicle must be used for business at least 50% of the time.
- To qualify, the vehicle must meet one of these requirements:
- Heavy “non-SUV” with a cargo area of at least six feet interior length (this area must not be easily accessible from the passenger area).
- Vehicles that can seat nine-plus passengers behind the driver’s seat (ie: hotel / airport shuttle vans, etc.).
- Vehicles with (1) a fully enclosed driver’s compartment / cargo area, (2) no seating at all behind the driver’s seat, (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield.
- Qualifying vehicles for Section 179 can be either new or used. They can also be either purchased or leased.
- Qualifying new vehicle purchases may also qualify for bonus depreciation. Bonus depreciation is generally taken after the Section 179 spending cap has been reached. The bonus depreciation is available for both new and used equipment.
- You can only claim the Section 179 deduction in the tax year that the vehicle was placed into service.
- You cannot claim the Section 179 deduction on a vehicle purchased for personal use the previous year, even if you change the purpose of the vehicle to business during the current tax year.
Note: For more information, please consult IRS.gov or your tax advisor.