Section 179 pitfalls for practice owners
Section 179 is a tax code which allows small businesses to take an accelerated tax write-off in the year of purchase for equipment which would otherwise be depreciated over time. Most of the equipment in a dental or medical practice qualifies and under the right conditions, it can be a great tool to reduce your tax liability while improving the technology in the practice. There are many folks out there preaching the benefits of Section 179 as an incentive for Doctors to invest in cutting-edge equipment that would improve their clinical prowess, and admittedly, there is a time and a place where we would agree; however, there are some Section 179 pitfalls for practice owners that need to be considered when making that determination.
What is Section 179?The following general rules apply for 2016:
- Spending Cap on Equipment Purchases = $2,000,000 after which, the Section 179 deduction available to your practice is reduced dollar for dollar;
- Deduction Limit = $500,000; and,
- Both purchased and leased/ financed equipment are eligible.