Business owners who acquire equipment for their business: machinery, computers, software, and other tangible goods, usually prefer to deduct the cost in a single tax year, rather than a little at a time over a number of years. This deduction is known by its section in the tax code, a Section 179 deduction. Under Section 179, businesses that spend less than $800,000 a year on qualified equipment, can write off up to $250,000 in 2009. The rules are designed for small companies, so the $250,000 deduction phases out when a business purchases more than $800,000 in one year.
For an illustration of how Section 179 can reduce the cost of acquiring equipment, go to the Tiger Leasing Tax Savings Lease Calculator.
What will happen in 2010 is anyone's guess. Politicians in Washington have not yet decided on what will happen to this provision in the tax code. So business owners should take advantage of it now, while it is available. They can further leverage this benefit by using a lease to spread the cash outlay over a period as long as five years.