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BLOG > December 2020 > Use Section 179 Deduction For Huge Tax Savings For Your Industrial Generator

Use Section 179 Deduction For Huge Tax Savings For Your Industrial Generator

Business owners should know there are legal tax deductions available to your operations that can drastically reduce your business taxes which thereby reduces the total cost of your used industrial generator investment.

What is Section 179?

Section 179 allows a business to deduct the full cost of capital assets (industrial generator for backup power) immediately instead of depreciating the asset over its useful life. This means capital savings now, not later.

Ensure your asset is eligible. To quality for a Section 179 deduction, the asset (used industrial generator) must be:Depositphotos_52895029_l-2015.jpg

  1. Tangible - physical industrial generators are tangible. Intangible assets like patents, trademarks, or copyrights do not apply.

  2. Purchased - a leased asset does not quality

  3. Asset used by more than 50% in your business - a used industrial generator investment is for business, not personal use.

  4. Asset not required from a related party - your used industrial generator is not meant to be used by family members but rather, your business.

In years past the common practice was to have the piece of equipment depreciated over its useful life. This complicates accounting while leaving money on the table. Section 179 eliminates any need to wait for the reimbursement while enabling the business to take advantage of a full purchase price refund on your corporate taxe rate in the current tax year.

By making the industrial generator investment toward the end of the calendar year, Section 179 allows you to minimize the time between purchase and tax credit savings.

Hypothetical example:Depositphotos_2284180_l-2015.jpg
A manufacturing business identifies the need for backup power and decides to purchase a used Cummins 350 kW generator.  Assuming a corporate tax rate of 35% and room within the $1,040,000 Section 179 allocation, they could bring their real purchase price down from $54k to $35k – a savings of almost $19k!  This would allow the business to procure the equipment at a much cheap price than originally anticipated.  While the business would have to pay the full $54k at purchase, they’d get the $19k as part of their income tax calculation.   The business could minimize the time between purchase and tax credit by making end of year capital purchases.  

Line Item Amount
Purchase of used 350 kW generator  
Corporate tax bracket  
Section 179 deduction (up to $1M)  
First year total deduction  
Cash savings (at corporate tax rate)  
Real equipment cost (after tax savings)  

Please contact Generator Source to learn more about the Section 179 deduction or any questions you have on your used industrial generator purchase!

Kyle Smith | 12/8/2020 11:36:34 AM | 0 comments
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