Section 179 of Tax Code Permits Deduction of Forklift Purchases in 2017

Your forklift fleet can provide you with a major tax deduction in 2017. That’s due to Section 179, which gives you significant tax relief for 2017 on business equipment and software.

The “Protecting Americans from Tax Hikes Act of 2015” still effects Section 179. The bill expanded the Section 179 deduction limit to $500,000 where it will remain for all of 2017. Businesses exceeding a total of $2 million of purchases in qualifying equipment have the Section 179 deduction phase-out dollar-for-dollar and completely eliminated above $2.5 million. The Section 179 cap will be indexed to inflation in $10,000 increments in future years.

Forklift fleet. (Courtesy: USS George Washington on flickr.com)

Forklift fleet.
(Courtesy: USS George Washington on flickr.com)

A 50 percent bonus depreciation will extend through 2019. Businesses of all sizes will be able to depreciate 50 percent of the cost of equipment (like a forklift) purchased and put into service during 2015, 2016, and 2017. Bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

To qualify for significant tax relief for the 2017 tax year your equipment (or forklift) and software purchases need to be financed and in place by midnight December 31, 2017.

The amount of savings depends on the amount of qualifying equipment and software that you purchase and put into use.

If you are thinking about buying or leasing new equipment like a forklift and/or software, it’s definitely to your advantage to use this tax break.

The 2017 deduction limit of $500,000 is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2017, the equipment must be financed and/or purchased and put into service between January 1, 2017 and the end of the day on December 31, 2017.

The 2017 spending cap on equipment purchases is $2,000,000. This is the maximum amount that can be spent on equipment like a forklift before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.

The bonus depreciation of 50 percent is usually taken after the Section 179 Spending Cap is reached. Bonus depreciation is available for new equipment only. Used equipment qualifies for Section 179 deduction, but does not qualify for bonus depreciation.

The Section 179 deduction works like this:

When your business buys certain items of equipment, it commonly gets to write them off a little at a time through depreciation. This means that if your company spends $50,000 on a machine, it gets to write off a certain amount of money a year for five years.

Section 179 permits you to write off the entire equipment purchase price for the year they are purchased. If a business could write off the entire amount, then they might add more equipment this year instead of waiting a few years.

Equipment that qualify for the Section 179 deduction include:

· Equipment, machines, etc. purchased for business use.
· Tangible personal property used in business.
· Business vehicles with a gross vehicle weight in excess of 6,000 lbs.
· Computers
· Off the shelf software.
· Office furniture
· Office equipment
· Property attached to your building that is not a structural component of the building including a printing press, large manufacturing tools and equipment.
· Partial business use. Deduction will be based on the percentage of time you use the equipment for business purposes.

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