Can I Take the Section 179 Deduction If We Finance?
A company is able to take the qualifying Section 179 Deduction with a properly structured finance or leasing agreement. In fact, it is the preferred method for most businesses who want to maximize tax benefits and improve cash flow.
Non-Tax Equipment Finance Agreement (EFA) or Capital Lease The main benefit of a non-tax equipment finance agreement or capital lease is that a company can still take full advantage of the Section 179 Deduction, yet make smaller payments. So, a business can acquire and write-off up to $500,000 worth of equipment during the current calendar year without actually spending $500,000 of cash this year! A business that is managing cash flow can leverage a non-tax EFA or capital lease and still take the Section 179 Deduction.
Examples of a qualifying structure are the Equipment Finance Agreement (EFA), $1.00 Buyout and 10% Payment Upon Termination (PUT). In many cases, the amount of the company's tax savings will exceed the amount of monthly finance payments made for the equipment during the current year, creating a surplus.
ProLease Capital Solutions, LLC does not provide tax advice. Consult your tax advisor.
