- Quick Credit
- Lines of Credit
- Term Loans and Leases
- Equipment Obsolescence Protection
- Inclusion of “Soft Costs”
- Tax Advantages
- Co-Terminous Addenda (CTA) Allowances
- Terms from 12 months to 60 months
Below you will find important information regarding industrial equipment leasing.
Tax incentives for manufacturing companies just went up!
Small Business Jobs Act of 2010, H.R. 5297 was passed by the House and Senate and signed into law by the President on September 27, 2010.
1. Extends and doubles Section 179 expensing - was $250,000 now $500,000.
The extension is retroactive to January 1, 2010. Section 179: This deduction now allows a company to deduct the first $500,000 of equipment (Section 179 Property) purchased in 2010 or 2011 from their taxable income. For companies purchasing (or leasing with a $1.00 buyout lease) up to $2,000,000 of equipment in 2010 or 2011, this deduction is available in full. It then phases out on a dollar-for-dollar basis between $2,000,000 and $2,500,000 and it is not available for companies purchasing over $2,500,000 of equipment in 2010 or 2011. However, companies can finance purchases over $2,000,000 with an operating lease and may still be able to claim this deduction. Always talk to your accountant to confirm eligibility of tax benefits.
2. Extends bonus depreciation
The new law extends, through December 31, 2010, 50% first-year bonus depreciation, which had expired at the end of 2009. The extension is retroactive to January 1, 2010. The new law carries a very short window of opportunity --- qualifying equipment must be purchased and placed into service on or before December 31, 2010. Always talk to your accountant to confirm eligibility of tax benefits.
Note – Smaller manufacturing companies intending to maximize tax write-offs and acquiring less than $500,000 in equipment per year in 2010 or 2011 would typically only utilize the Section 179 deduction and not the bonus depreciation. Larger companies that acquire more than $2,500,000 in equipment in 2010 would typically utilize bonus depreciation instead of Section 179 deduction. Companies that acquire more than $500,000 in equipment and less than $2,500,000 would typically use a combination of both.
3. Acquire a machine in 2010 or 2011 and get a tax refund against taxes paid in the previous five years.
Allows five-year carrybacks of NOL (net operating losses) resulting from Section 179 and Bonus Depreciation (Bonus 2010 only) –The new law extends the carryback period for eligible small business credits to five years. An eligible small business for purposes of the enhanced general business credit is a corporation whose stock is not publicly traded, a partnership or a sole proprietorship. Additionally, the average annual gross receipts of the corporation, partnership, or sole proprietorship for the prior three tax year periods cannot exceed $50 million. Always talk to your accountant to confirm eligibility of tax benefits.