Will You be taking advantage of the 179 tax code incentives before the end of this year ?

Will you be taking advantage of the 179 tax code incentives before the end of this year ?

  • Yes

    Votes: 4 26.7%

  • No

    Votes: 2 13.3%

  • I am not sure what 179 tax incentive is all about

    Votes: 4 26.7%

  • unsure

    Votes: 5 33.3%
  • Total voters
    15
Section 179 deduction is the ability to completely depreciate a items full purchase price in one year.
Last year I 179'd a new truck, this year I will 179 my new spider lift and it's trailer to try and get my tax liability as low as possible.
 
It seems like a tax code that forces growth at a potentially fatal rate. I look at a large purchase (especially something financed) as a tax sink at least for the years under financing. If I were to write off my new truck completely this year I would have to buy something large next year. And so on. Which in the wrong market could lead to catastrophe... I've seen it several time with good friends. Growth is good, growth too fast not so good. But I'm just a dumb arborist, I see money coming in and money coming out... I let the accountants look at the taxes and help me make the big decisions like 179.
 
I remember reading about this accelerated depreciation a while ago. If my memory serves it was started so that companies would make more purchases that would create more goods and products being built. Which leads to more paychecks. The government still collects the same in taxes but it comes in quicker. Then if things go right for the purchaser they can do the same I the coming years
 
Didn't they just do another accelerated depreciation thing recently, where you can take half in one year? Call me cynical but could all this be some kind of way for this administration to juke the stats? Show more growth, etc. Or to sell more new equipment to business owners.
 
There may be some deep conspiracy...I don't think so.

When I was in college I took a macro economics class. The professor was Walter Heller. He was the main architect of the Marshall Plan to rebuild Europe after WWII. He was also Kennedy's chief financial advisor. He taught us Kensyian Econ. I don't recall a lot of the class but what I did learn has been enough for me to make sense of some of the economic stimulus programs and tax shuffling.

It seems that if this option works for a company there isn't a downside. No downside for the government either. The depreciation is taken and taxes collected. And, if things work out more goods are sold. Thus...creating more paychecks which leads to a more stable economy.
 
Tom Dunlap said:
There may be some deep conspiracy...I don't think so.

When I was in college I took a macro economics class. The professor was Walter Heller. He was the main architect of the Marshall Plan to rebuild Europe after WWII. He was also Kennedy's chief financial advisor. He taught us Kensyian Econ. I don't recall a lot of the class but what I did learn has been enough for me to make sense of some of the economic stimulus programs and tax shuffling.

It seems that if this option works for a company there isn't a downside. No downside for the government either. The depreciation is taken and taxes collected. And, if things work out more goods are sold. Thus...creating more paychecks which leads to a more stable economy.
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Wow! I have to say, that is a very well written response Tom. !! Nice work. Sec 179 had bee around for some time. Retailers use it to lure in people to buy during tax season. As Tom pointed out the reality of it is " it's just smart tax accounting. Tom, I definitely want to buy you a beer some time and have a long conversation. I worked with a company out of Berlin after the fall of the wall. It was very interesting to see the effects of the "west" moving into the eastern sector. I talked to clients we were working for who had horror stories of abandoned factories that were receiving tons of shipments of brand new equipment all done to somehow wash money/ drown eastern economy and build western business. Those were very interesting years. Lots of coffee and home cooked meals when we worked for the east Berlin people. We would start a removal at 8 am, and at 10 am a full breakfast was served in the garden with home backed bread, garden vegetables, eggs, meat and cheese. We would sit and talk for over an hour. Very very interesting conversations with people who grew up behind the iron curtain.

Thanks for that response ... Took me down memory lane for some reason.
 
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The problem with 179 is that after that first year you still have to make the big payments on the machinery, but you don't get to count it on your taxes. i.e. The first year is great, but after that you have to buy another and another to deal with the following years...but then when you are financing all that machinery and can't deduct any of it off your taxes.... The depreciation happens no matter what, it just depends if you want to spread it out or take it all at once on the first year leaving non for the following.
 
Hell no. My acct 179ed my new chipper two yrs ago. I am not happy that she did as now, like John says ,I have to double down to keep up with what I cannot write off. Which means I just pay more to the govt. faahk that!
 
I believe this is more for larger companies who purchase equipment every year and usually can count on a sizable income each year. If u r a smaller company, def check with the accounts. Side note, I used to manage a very large company who took advantage of this program. They depreciated a $180000 crane one year and on paper it screwed the bottom line which jacked up my bonus. Like many programs, it helps the big guys most.
 
Thanks for this conversation. I do offer basic bookkeeping which is different than accounting and taxes but I also like to know stuff like this just in case I get asked.

I have to agree with those who say it probably works if you have big equipment purchases EVERY year, and there may be some companies that do; otherwise, you are probably better off doing the depreciation schedule thing and set aside the "paper expense" to set your revenue targets to cover them. Then you can set aside a chunk of change, if you meet those income goals, that is for major purchases as you need them.

This probably makes more sense for charities which is where I learned this stuff since nonprofits don't pay any income tax; still, paying a little bit of tax on an interest bearing savings account may be less painful than buying big equipment you don't really need just to keep from getting hammered every year. But maybe worth a conversation with your accountants about how each scenario looks for you.

Check out my new website by the way: http://www.yourvirtualsherpa.com/
 
baumeister said:
Wow! I have to say, that is a very well written response Tom. !! Nice work. Sec 179 had bee around for some time. Retailers use it to lure in people to buy during tax season. As Tom pointed out the reality of it is " it's just smart tax accounting. Tom, I definitely want to buy you a beer some time and have a long conversation. I worked with a company out of Berlin after the fall of the wall. It was very interesting to see the effects of the "west" moving into the eastern sector. I talked to clients we were working for who had horror stories of abandoned factories that were receiving tons of shipments of brand new equipment all done to somehow wash money/ drown eastern economy and build western business. Those were very interesting years. Lots of coffee and home cooked meals when we worked for the east Berlin people. We would start a removal at 8 am, and at 10 am a full breakfast was served in the garden with home backed bread, garden vegetables, eggs, meat and cheese. We would sit and talk for over an hour. Very very interesting conversations with people who grew up behind the iron curtain.

Thanks for that response ... Took me down memory lane for some reason.
Click to expand...

Wow, cool story, baumeister! Have chainsaw, will travel, is right! Pretty cool that those folks were so nice to you guys. How did it come about that you were in Germany during that time, if you don't mind my asking?

Tim
 
You would be a fool to not take advantage of depreciation and accelerated depreciation if it fits you long term tax strategy.
 
TimBr said:
Wow, cool story, baumeister! Have chainsaw, will travel, is right! Pretty cool that those folks were so nice to you guys. How did it come about that you were in Germany during that time, if you don't mind my asking?


Tim
Click to expand...

I left for Germany after college. Grew up in Germany as a boy ( first four years of school). After college I decided to head back over there cuz of the wall situation. I had dual citizenship due to my childhood years there with German parents.
 
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