ss_blog_claim=bd50edc517cf0b7549fe6b5f63b6b5f8 The SLS Business Finance Blog: More on Black Friday

Friday, December 5, 2008

More on Black Friday

So IRS Section 179 lets you depreciate the entire cost of the equipment even when written in a certain lease structure known as a Capital lease. So how does it work??

Let's say you had a better year than expected and since expenses stayed the same, you now have a taxable profit to the Feds of $50,000 instead of Zero like you had last year. If you are in the 28% tax bracket, then you owe the gov't and extra $14,000.

If you know you will need $40,000 of additional equipment for 2009, and you get that equipment delivered before Dec 31, then that $40,000 can be immediately deducted from your taxable income, reducing your taxable income to $10,000 and your tax liability down to $2800, a tax savings of $11, 200. That's real $$ that can be used for other purposes.

The last important thing to remember is thanks to the Economic Stimulus Act of 2008, passed in the spring, this year only, the limit of how much can be deducted this way goes from 128k up to 250k.

Southern Lending Solutions

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