Section 179 Equipment Lease Example Video

Here is an example of a business owner using tax code section 179.

Steve is the owner of small business. Based on this years performance he is going to fall into the 35% tax bracket. If he finances or leases qualifying equipment he can deduct the whole purchase price from his gross income. Steve finances $100,000 in equipment, reducing his taxable income by $100,000 and giving him a tax savings of $35,000. Now steves after tax savings cost of equipment is $65,000. If Steve waited until next year to purchase it could have cost him $35,000 more for the same equipment.

Calculating Section 179

$100,000.00 Cost of Equipment

-35,000.00 Tax savings from depreciation (assuming 35% federal and state tax bracket)

$65,000.00 Net cost of equipment after first year