Use the Section 179 deduction to decrease your 2011 tax payments and increase cash for your other needs!

Acquire capital Dental equipment in 2011, and you are most likely able to deduct up to $500,000! Capital leases qualify for a tax deduction for the year they are placed in service.


If you intend to purchase real property or equipment, you can take advantage of this huge saving before the end of the year.

Here’s the summary:

Section 179 allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated. This property is generally limited to tangible, depreciable, personal property which is acquired by purchase for use in the active conduct of a trade or business. Buildings were not eligible for section 179 deductions prior to the passage of the Small Business Jobs Act of 2010; however, now qualified real property may be deducted.

Depreciable property that is not eligible for a section 179 deduction is still deductible over a number of years through depreciation according to sections 167 and 168. The 179 election is NOT mandatory, and the eligible property may be depreciated according to sections 167 and 168 if preferable for tax reasons. Further, the 179 election may be made only for the year the equipment is placed in use and is waived if not taken for that year.

The § 179 election is subject to three important limitations:

First, there is a dollar limitation. Under section 179(b)(1), the maximum deduction a taxpayer may elect to take in a year is $500,000.It is scheduled to stay at this amount for tax years beginning in 2010 and 2011.

Second, § 179(b)(2) requires taxpayers who place more than $2,000,000 worth of section 179 property into service during a single taxable year to reduce, dollar for dollar, their § 179 deduction by the amount exceeding the $2,000,000 threshold.

Finally, § 179(b)(3) provides that a taxpayer’s § 179 deduction for any taxable year may not exceed the taxpayer’s aggregate income from the active conduct of trade or business by the taxpayer for that year If, for example, the taxpayer’s net trade or business income from active conduct of trade or business was $72,500 in 2011, then the taxpayer’s § 179 deduction cannot exceed $72,500 for 2011. However, the § 179 deduction not allowed for any year because of this limitation can be carried over to the next year.

Here’s an example of tax saving from an equipment purchase :

This information provides general guidance. This is not financial tax advice. Consult your tax advisor for individual circumstances.

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