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Tax Implications of Capital Purchases

Consider these incentives and consult a professional before making any big moves.

When acquiring capital assets to your business, make sure you consult your tax professionals on your approach. Taking advantage of tax incentives, such as Section 179 and Bonus Depreciation deductions, can offer you considerable tax breaks. If you’re purchasing assets toward the end of the calendar year, this becomes even more critical. Depending on the advice of your tax professionals and your financial circumstances, you may choose to place the new equipment into service before year-end, or perhaps after year-end in the new fiscal year.

In the past few years, Congress has done a very poor job of passing tax incentive legislation until the very end of the year, thus disallowing businesses to tax plan throughout the year. However, the tax incentive package passed in late December of 2015 stipulates that these tax deductions will be available for the next several years to come. This will allow you, for the first time in several years, to plan capital acquisitions with the tax impact in mind. Take advantage of the opportunity.

Read more business and management advice from Marty here.

Read more from our January/February 2016 Spring Ideas issue here.

View more from this Big Picture issue