In 2021, you need to pay close attention to the Section 179 deadline, and make sure you aren’t left out. 

Is it odd that I’m saying this in May? Not this year. And that’s due to supply chains across the board being affected by pandemic shutdowns and post-reopening labor issues. And it is catching many purchasers (both consumers and businesses) off guard, and will continue to do so in the short term.

To give a personal anecdote as an example, I recently moved. And Mrs. Fletch and I left a lot of our old furniture behind, figuring we’d buy new. What we didn’t figure on was the astonishingly long lead time due to the pandemic. Seriously, we’ll be waiting close to four months for a bedroom set. We were lucky on the fridge – that only took two months… 

So what does this have to do with businesses and Section 179? Well, the rules for Section 179 state that the equipment must be purchased and put into service by midnight, 12/31. Well, if you are waiting on delivery, you can’t put it into service, can you? 

That’s why I am mentioning this in May. If you are looking to purchase equipment in 2021 and planning to take a Section 179 deduction for it, you should be thinking about doing it soon. The last thing you want in this situation is to miss the “put into service” part of the deadline (it’s not enough if you pay for the equipment in full in 2021 – if it’s not put into service, it’s not eligible for Section 179.) 

I don’t have to tell you that 2021 is a strange year. As we emerge from the pandemic, it’s going to take time for all industries to resume normal manufacturing and delivery schedules. So definitely check and see how long your purchase is going to take to get to you. And if you need to, buy it now. 

This will be my last post for 2017. And besides wishing you all a great Holiday season and New Year, I also want to point out that the time for using Section 179 for 2017 is growing short.

If you want the Section 179 deduction for 2017, you have until midnight, 12/31/2017 to buy and have the equipment in service. Because once the New Year’s ball drops, that’s it – Section 179 for 2017 is over.

Let me reiterate something I’ve been saying all year – the Section 179 tax deduction is so good, that you’d be almost silly not to take advantage of it. It’s a full $500,000, and your total equipment purchases can total $2 million before the tax deduction starts to phase out. This makes it a true small business tax break – most small companies simply aren’t going to exceed that $2 million dollar cap, so it’s very likely that everything you buy equipment-wise you will be able to deduct in full. That’s pretty sweet.

Better still, if you finance the equipment, you’ll take the deduction for 2017, and not make a single payment until 2018 – this can have a profound effect on your year-end financials, and also get you needed equipment right now. For many companies, 2017 was a solid year, and using this tax deduction plus equipment financing can make it even better.

Beyond that, I do hope your December is going great. A lot of companies are really busy now, even if they don’t sell consumer-related products. Plus, a company like mine has a busy December for the exact reason I stated above – companies say “we need to spend $xx on equipment to take a deduction, so let’s get to it”. So I’ll be here until that Midnight bell rings on 12/31.

Have a great holiday, everyone, and I’ll see you in 2018!

Here it is, the last call for Section 179. As long as you buy the equipment and put it into service by midnight 12/31/2016, you’re in for that fat Section 179 deduction for 2016.

As you likely know, the Section 179 Deduction was raised to $500,000. And it’s generally good for most capital equipment. This means for most small and medium businesses, almost anything they buy for their business qualifies. New machines? Yup. Office furniture? Sure. Office machines? Yes indeed.   

Here’s a partial list that covers most things:

• Equipment (machines, tools, etc.) purchased for business use
• Tangible personal property used by your business
• Business Vehicles with a gross vehicle weight in excess of 6,000 lbs.
• Computers and “Off-the-Shelf” Software
• Office Furniture and Office Equipment
• Property that is “attached” to your company building, but is not a structural component of the building (large manufacturing machines/equipment)
• Partial Business Use Equipment (something that’s used only sometimes in business – the deduction is typically for the percentage of business use)

You can buy the equipment from anywhere, and it can even be used. You can even go down to your local supply shop on New Year’s Eve, buy that machine you’ve had your eye on, bring it back to your company, plug it in and turn it on – as long as you turn it on before midnight on the 31st, you’re good (and literally, I’ve seen people do exactly that!)

One more thing – you can finance the equipment, take the full deduction for 2016, and not even start paying until 2017. That’s a nice little scenario for your 2016 bottom line, isn’t it? New equipment, and a nice tax deduction to boot.

Again, if you are reading this before midnight 12/31, you still have time. Even if it means rushing out to Big Joe’s Equipment Shack at 10pm!

Have a Happy New Year, everyone.

Not that you haven’t noticed, but the cold weather is long gone, and we’re on the brink of summer. In short, the year is half over already. Have you thought about Section 179 yet? Because you really should. Here’s why:

• The Section 179 deduction is still high, but not for long – As of right now, Section 179’s deduction limit is a healthy $125,000. But that’s only going to be true for this year. Next year, it’s set to fall to $25,000. We don’t know what’s going to happen in the future, but I’ll tell you this – if it were me and I was thinking of taking advantage of this tax deduction, I’d do it now. And that brings me to my second point.
• Romney is on Obama’s mind… Obama is on Romney’s mind – This is an election year, and the players are all set. And while I can’t predict the future (despite my big super bowl hit… really, can you believe I actually predicted that?), I do suspect that increasing Section 179 for this year or next is probably the furthest thing from anyone’s mind right now. Waiting for an increase could be a pretty bad gamble. There’s an election to win, and that’s going to be the only game in town.

The fact that Section 179 hasn’t been increased yet is telling. It says that the limits we see right now could very well be the limits we are stuck with. So if you were thinking of adding more than $25,000 worth of equipment over the next year or two, 2012 is the year you should do it. At the minimum, plan your 2012 purchases so you can take full advantage of the six figure deduction we have right now – if it increases next year, you can always take advantage of that then. But at the least, you’re getting your full deduction for 2012. Just remember, the equipment has to be purchased and put into use by midnight 12/31/2012. I know that seems far away, but we all know it’s not (after all, wasn’t last New Year’s Eve seemingly just yesterday?)

Enjoy the nice weather folks. It’ll be winter before you know it.

• 2009 will be tough for many folks. There is no way around that. Jobs will disappear, and workers will be displaced (made redundant, downsized, rightsized, kicked to the curb, kicked to the curb with a steel toed boot, kicked to the curb with a steel toed boot and run over by the company limo on the way to a corporate retreat, etc.)

• Unemployment will rise. 8%… 9%… heck, there is a possibility that we will see double-digit unemployment in some areas. I will attribute this to several factors: the obvious downsizing in many industries, coupled with an increased aggressiveness in offering retirement incentives to older, higher-paid baby-boom workers.

• But from this chaos will come opportunity as well – it will present a chance for many companies to differentiate themselves from weaker competition. Like you’ve heard me say here before, it’s easy to compete in good economic times. So 2009 will cull the herd a bit in regards to established companies.

• Related to the above, companies that traditionally used cash will now look to leasing more and more. Equipment leasing can still be had, and companies will find out that it’s pretty darn profitable as well. However, lease terms will continue to tighten some, as equipment finance companies and banks look to limit losses and bad debt. But again, strong companies will be able to get credit.

• Continuing on the opportunity theme, not every laid off / displaced / “asked nicely to leave” ex-employee is going to sit in his or her Barcalounger watching Wheel of Fortune. 2009 will see record numbers of small business startups.

• Those small businesses will need help, and the new administration will answer. I predict the Economic Stimulus Act of 2008 will be renewed, and perhaps even enhanced. Meaning my old buddy Section 179 gets a nice little facelift.

• In fact, we will see several attempts by the government to help businesses. Meaning we may see the return of the Temporary Investment Tax Credit (MIA for almost a quarter century). Personally, my industry (equipment finance) would love to see something like this.

• The Titans will win the Super Bowl, the Yankees will win the World Series, the Celtics will win the NBA title, and the Red Wings will win the Stanley Cup.

• The Dow will fluctuate wildly – one day, it’ll be doom and gloom, then there will be a rally. Wash, rinse, repeat. Antacid sales on Wall Street triple. And at the end of the year, the Dow will sit right around 8400.

• Fuel prices have had enough of the roller coaster that was 2008. Demand has dropped, and will stay at lower levels, somewhat stabilizing fuel prices.

• Lastly, in order to stimulate the local economy, the government establishes the “FletchFund”, enabling the purchase of home theater equipment, a pool table, and that sweet tractor at Home Depot (the big one.) This is a fairly necessary step for a healthy 2009, and one I encourage Obama get right on.

Many of these suppliers are currently engaged in the production of an evolving series of armored fighting vehicles designed to withstand IEDs and roadside ambushes. These technologically advanced vehicles are largely replacing the Humvee and other light trucks in supporting combat operations.

Mine-Resistant Ambush Protected Vehicles (MRAPs)

There was a military requirement for a new and improved Mine-Resistant, Ambush-Protected Vehicle, also known as an MRAP. The previous model of the vehicle, which transitioned from design to deployment in just two years, was not designed to manage the rocky terrain of Afghanistan, and its excessive weight posed challenges for transportation to areas where it was most needed.

The MRAPs are integral to current U.S. military campaigns and are crucial in protecting troops from roadside blasts, which are the leading cause of combat-related death and injury in Iraq. Over 8,000 MRAPs are currently operational in Iraq and 900 in Afghanistan. Recently, the Pentagon announced financial plans to expand their fleet of MRAP vehicles from 2,300 to 17,700 by Spring 2009.

MRAP Light

The U.S. Marine Corps has issued an urgent call for an MRAP light, a vehicle that would provide the same protection as the MRAP, but with enhanced maneuverability. General Dynamics and Force Protection, Inc. are both collaborating with the Marine Corps to determine whether the existing MRAPs should be modified to better meet military needs, or whether an entirely new vehicle is necessary. Both companies are working swiftly on the project.

On September 5, Force Protection, Inc. announced the receipt of a $7.2 million contract from the Marine Corps for the expedited development of lighter MRAP vehicles.

BAE Systems, a British company with a manufacturing facility in Fairfield, Ohio, launched its new, lighter MRAP- the Caiman Light at the start of this month. The Caiman Light is a five-person, 4X 4 version of the 6X6 Caiman MRAP Vehicle, offering comparable protection at two-thirds of the 18-ton gross vehicle weight of the original model.

Several other arms and defense companies are competing for a share of the financial investment, as the military demands both the protection of the MRAP and the maneuverability of its smaller counterparts. Keep an eye on this space for further updates.

Sources:

Defense Update, UPI

For those who don’t know, I’ll recap Section 179 a bit essentially. It’s a small and medium business tax deduction meant to spur equipment purchases by these businesses. It accomplishes this by allowing a business to take a full deduction on qualifying equipment (instead of depreciating it over time.) This means if you buy (and put into service) a $10,000 piece of equipment right now, you can deduct that entire $10,000 from your gross income on next April’s tax return.

Pretty sweet, if you ask me.

The caveat is the equipment must be purchased (and put into service) by Jan 1, 2009. Basically, that means you have until the end of the year (which, if you haven’t looked at your calendar, is now definitely in sight.)

Now, I just mentioned that this is the year to take advantage of Section 179. That’s because the Economic Stimulus Act of 2008 greatly increased the limits of Section 179, and added a few other goodies to the mix. But these limits (and goodies) may not last much beyond this year, so if you were thinking about a purchase, now is the time, my friend.

In addition, if you finance the equipment (or lease the equipment), you could actually pay less in payments next year than the tax savings you get, making Section 179 an actual source of profit for many firms (who knew equipment financing and equipment leasing could be profitable?)

There’s a great informational website regarding Section 179 which should answer any questions you may have (it also has a pretty snazzy Section 179 Calculator.)

Ok, off to enjoy what’s left of summer!!