Receive Your Complete 35% Rebate All At Once
Let’s say you just bought a $1400 refrigerator for your restaurant. The government considers your purchase to be a capital investment, and as time passes and as the refrigerator loses value, you can deduct its depreciated value from your income taxes. Basically, your refrigerator grows old and the government periodically sends you some money back.
Well, in 2008 during the financial crisis, Congress passed the Economic Stimulus Act with the Section 179 provision attached. With Section 179, the IRS allows business owners to anticipate the depreciation of newly purchased equipment and get its full, multi-year refund the same year they bought it. So if you buy a $1400 refrigerator in 2014, you can subtract its future depreciated value from your current income taxes and receive an extra $490 with your 2015 refund check. Using this law, a $1400 refrigerator effectively costs $910.
A specialist in tax law, Stephen Fishman, J.D., puts it like this :
" Section 179 doesn’t increase the total amount small business owners can deduct, but it allows them to get their entire depreciation deduction in one year rather than taking it a little at a time over the term of an asset’s useful life — which can be up to 39 years.
This Incentive Ends at Midnight December 31st
Section 179 was passed as part of the 2008 Stimulus bill, and since now the recession is over, Congress is concluding this incentive. The last opportunity to take advantage of it is December 31 of this year; after that, depreciation rules return to normal.
If you wish to participate, you have a few options. You can buy the equipment outright before the 12/31 deadline — that’s one way of doing it. But you can also lease the new equipment. Even if your restaurant is still making payments on the equipment, as long as the item was paid for by someone before 2015, it qualifies for Section 179. Should you choose to go this route, remember that lease agreements take time to process, and just because you fill out an application before the deadline doesn’t mean that you will necessarily meet that deadline.
More Information on §179
Tax law can be difficult to understand. For more information on Section 179, this website does a much better job at explaining it than we can. They have a FAQ and a deduction calculator as well as a comprehensive guide on the law from beginning to end. Either way, talk to your accountant about it and ask their opinion. Tens of thousands of restaurant owners have already taken advantage of this incentive, and this is your last chance to get in too.
