Business owners usually prefer to deduct equipment 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 $2,000,000 a year on qualified equipment may write-off up to $500,000 in a year. The government in December 2015 passed legislation making this a permanent part of the tax code and indexing the deduction to inflation going forward. The rules are designed to encourage small businesses to invest in the equipment they need to grow and operate their businesses. Section 179 may apply to convenience store equipment such as coolers and car washes. Section 179 may also apply to gas pumps, EMV kits, point of sale systems, LED lighting upgrades, and other capital investments at a site. For a full listing of applicable equipment and to understand how this may benefit your business, please contact your accountant and your Patriot Capital representative.
Virtually all retail and commercial petroleum equipment qualify for a Section 179 deduction of up to $500,000.
Section 179 Expensing
- $500,000K expensing for annual purchases, including 2015 and 2016.
- Phase out dollar for dollar when purchases exceed $2,000,000
- Property can be new or used.
- The property must be placed in service by December 31 to qualify for current year Section 179 tax savings. For example, in 2016 you must have your equipment installed and in service by Dec. 31, 2016, to qualify for Section 179 in 2016.
Combining the benefits of Section 179 with the cash flow benefits of equipment financing can provide a number of benefits to your business. Please contact your tax advisor to learn about the specific tax increment benefits this may provide to your C-Store business from Section 179.