This pleases me to read, because like everyone else, I just get sick and tired of dire economic news. There is a definite placebo effect / self fulfilling prophecy aspect to it all, so anytime the news is good, I stand up and cheer. Listen, we’re all still here, and things are moving along.

So with that in mind, let me do my “every few months Section 179 reminder.” Really, if you look back in this blog, you’ll notice I tout Section 179 continually, because I personally think it’s a business’s best friend. Because Section 179 performs several “economic stimulus” (or is it stimuli?) actions at once.

First, it gets a business the equipment it needs right now – equipment that might be used to produce new products or services (or maybe better deliver/manufacture old products and services.) Or maybe the new equipment is the difference between turning a profit and not turning a profit.

The reason Section 179 lets people get equipment now is it allows them to take a full deduction on the equipment’s purchase price this year. And, the “higher Section 179 limits” put into effect in 2008 were extended. Meaning if you act this year, you get to take advantage of the most generous Section 179 limits yet.

Now, let’s throw in equipment financing (you knew that was coming.) If you finance the equipment, you only pay a portion this year (especially since the year is almost two thirds over). But you take the full deduction now. So you deduct the full price, but because you financed equipment (leasing works too), you only pay a small portion back this year. And the amount you pay back this year is WAY less than you deducted. You know what that is, right? Instant profit. Now you can see why Section 179 is so popular.

So I’ll repeat it – don’t forget Section 179. But if you do, I’ll be back again to remind you in a few months (weeks.)

Increased Section 179 limits expected to be extended thru 12-31-2009

The increased benefit of Section 179 Deductions enacted in last year’s Stimulus Act appears to be safely extended through this year’s tax year-end. The official title of the bill in Congress is American Recovery and Reinvestment Act of 2009 and the number of the bill is H.R.1 (the Senate’s version will be S.1.) Section 179 is specifically addressed on page 271, line 7 as follows:

SEC. 1402. TEMPORARY INCREASE IN LIMITATIONS ON EXPENSING OF CERTAIN DEPRECIABLE BUSINESS ASSETS. (a) IN GENERAL. – Paragraph (7) of section 179(b) is amended –

(1) by striking ‘‘2008’’ and inserting ‘‘2008, or “2009’’, and

(2) by striking ‘‘2008’’ in the heading thereof and inserting ‘‘2008, AND 2009’’.

(b) EFFECTIVE DATE. – The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

In plain words, that means the Reinvestment Act of 2009 extends the enhanced incentives established for 2008 = significantly increasing your purchasing power when it comes to buying equipment, vehicles, and software for the rest of this year!

Last week brought about significant changes to Section 179 of the US Tax Code, often referred to as the “Hummer tax break” in our previous discussions. Just to jog your memory, this provision allows businesses to purchase equipment and write off the entire cost, albeit with certain limits in place.

Well, the Economic Stimulus Act of 2008 was implemented last week. You’ve likely heard of this Act—it’s the one prompting Uncle Sam (my favorite uncle when such matters are involved) to send most of us a $600 check.

But the benefits of this Act don’t stop at individual taxpayers. There are also significant provisions for businesses, including an increase in the limits on Section 179 and an additional depreciation write-off once those limits are reached. Prior to this Act, the cap on deductions for equipment purchases stood at $128,000, with the total cost of equipment purchased not exceeding $510,000. But the Economic Stimulus Act of 2008 has significantly bumped these numbers, raising the deduction cap to $250,000 and the total cost limit to a whopping $800,000.

What does this mean for businesses? The message is loud and clear: Invest in your business through equipment purchase or leasing.

There’s never been a better time to invest in your business’s growth. Just to illustrate the point, consider this example where your business buys $400k of qualifying equipment:

As you can see, this is a big deal. You could get $400k worth of equipment for a net cost of $281k. That’s a saving of $119k! I don’t know about your experiences with your uncles, but it’s not every day that mine offers me a gift of this magnitude. Sure, I remember the old socks, but this is quite a different league.

If you’re interested in exploring these savings further, there are several online Section 179 tax calculators that can help you understand the potential benefit to your business. It’s a brilliant opportunity to make significant strides in your business growth, so don’t miss out.

Happy number crunching, and here’s to your business’s prosperity!