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If you own a dental building or are considering buying one, you have almost certainly heard about Section 179. Your dental equipment supplier probably uses it to pitch year-end purchases. What is less commonly explained is how Section 179 compares to bonus depreciation — and why the distinction matters enormously for dentists using the LLC rental structure. Here is the breakdown Wes Read walks through in Episode 152 of The Dental Boardroom.
Both are acceleration strategies. Neither creates new tax deductions. What they do is change the timing of deductions you were already entitled to. Instead of deducting the cost of a capital asset over 5, 7, or 15 years — the standard depreciation schedules — both strategies allow you to pull some or all of that deduction into the year you purchased the asset.
The difference is in how they work, where they apply, and what they allow you to do with the result.
Section 179 cannot create a tax loss. If your S-Corp has $75,000 of net taxable income and you elect a $100,000 Section 179 deduction, it brings your income to zero — but it stops there. It cannot go negative.
Bonus depreciation has no income floor. It can take your taxable income below zero and generate a net operating loss, which can then be applied against other income or carried forward to future years. For dentists using the LLC rental structure, this is critical. Bonus depreciation is almost always the right choice inside the LLC because it can fully shelter rental income and create a loss that compounds the tax benefit.
Section 179 must be elected. If you do not actively choose it on your tax return, the default depreciation schedule applies.
Bonus depreciation, when legally available, is automatic. When you purchase qualifying assets, bonus depreciation applies unless you affirmatively opt out. This matters because if you do not plan in advance, you may receive bonus depreciation treatment without realizing it — with consequences for your multi-year tax picture.
Any Section 179 deduction that cannot be used in the current year — because it is capped at taxable income — carries forward to future years. It is not lost.
Bonus depreciation losses can be carried forward as net operating losses, and in some cases can be carried back. The mechanics differ depending on your entity structure and tax situation, and this is an area where working with a dental CPA who does multi-year planning is essential.
Section 179 begins to phase out at approximately $3.5 million in total asset purchases in a given year. For virtually all dental practices, this threshold is irrelevant.
Bonus depreciation has historically been subject to phase-down schedules — for example, dropping to 80%, then 60%, then eventually zero. As of 2025, Trump's One Big Beautiful Bill reinstated 100% bonus depreciation on a go-forward basis. That means qualifying assets purchased after 2025 can again receive full first-year deduction treatment.
Section 179 is the right tool when you have strong taxable income and want to reduce it to near zero but not below. It is commonly used for dental equipment purchases.
Bonus depreciation is the right tool when you want to create the largest possible loss — especially inside the real estate LLC, where generating a loss can shelter rental income and potentially offset dental practice income if the dentist's spouse qualifies as a real estate professional.
One of the most important practical points Wes raises: be very careful about electing Section 179 on financed equipment. If you finance a $100,000 piece of dental equipment and take the full deduction in year one, you will look — and feel — like a tax genius. You owe nothing out of pocket and you just generated a $100,000 deduction.
But in years two through five, you are making loan payments with no corresponding tax deduction. The deduction was already used. The cash is going out. To compensate, many dentists end up buying more equipment and taking more Section 179 deductions just to maintain the same tax profile — a cycle that can compound and become difficult to manage.
Wes's rule: match the deduction to the cash flow. If you financed the equipment over five years, depreciate it over five years. If you paid cash, take the full deduction in year one.
Bonus depreciation and Section 179 are not interchangeable tools. Each has a specific use case, and using the wrong one — or using either without a multi-year model — can create tax outcomes that look great on paper in year one and become painful by year four. Work with a CPA who plans forward, not just backward.
Listen to Episode 152 of The Dental Boardroom Podcast: https://podcasts.apple.com/us/podcast/152-cost-segregation-tax-strategy-for-dentists-part-4/id1518344747?i=1000761993737
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