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For the last two years about this time, Jack Selzer, NAEDA’s Tax Attorney has provided the basic tax depreciation/expense rules that can help sales people in making new and used equipment sales before year end. Because of some changes, it is timely to revisit these rules.
There are two provisions we need to look at --
Section 179 expense deduction for new and used equipment. The Section 179 deduction for 2013 is $500,000. There is a “phase out” $ for $ after the purchase of $2,000,000 of new and/or used equipment. This if a customer has $2,500,000 of purchases in 2013 there will be no Section 179 deduction. This phase out shows that this deduction is designed for small and mid-sized businesses.
Bonus depreciation for new equipment. Like last year, the extra additional bonus depreciation is 50% of the purchase price of new equipment. Example – if a customer buys new equipment in 2013 for $600,000 the customer can take an extra $300,000 bonus depreciation deduction in 2013.