Section 179 and Applying it To Stone Machinery Shops

Taxes aren’t fun, but saving money on a depreciation deduction allows you to address the lost value of your business property. Knowing the ins and outs of this tax deduction can save you significant money. That’s one less dime you have to give to the government.

This deduction is known as Section 179, which is an immediate expense that you can take. This article will teach you how you can deduct used stone machinery from your taxes without waiting for depreciation.

What is Section 179?

According to the IRS, Section 179 allows businesses to deduct the entire cost of the qualified property when it is in service. Section 179 goes beyond depreciation by enabling you to write off the whole purchase price of equipment for the current tax year.

How Much Can You Deduct with Section 179?

In 2021, the total amount you can deduct is $1,050,000. You will deduct these while submitting state and federal income tax during the year 2022. This amount is higher than the previous year of $1,040,000 million.

If you are doing back taxes and current taxes for both years, you can feasibly write off a total deduction of $3,670,000. That’s because the total amount of purchased equipment for this year is $2.6 million. Once you spend this total amount, the entire deduction is gone.

Who Does Section 179 Primarily Benefit?

Because the deduction limitations are about $3.5 million for all pieces of equipment, these benefits go to small and medium businesses. While large companies may expense using the same section, they typically expense their fleet quickly. So, section 179 is primarily beneficial for small businesses.

Section 179 also works for digital assets with easily trackable values. That means you could feasibly deduct expenses like Quickbooks but not deduct your customer list using CRM software.

How Can My Business Benefit From This?

Your business must be aware of the dollar limitation behind Section 179. If you are a small to medium-sized business, you can take full advantage of this depreciation. If you plan on spending tens of millions in equipment, the deduction is not as helpful

Your property must also be used for business purposes for 50% (or more) of the time to qualify for section 179.

That means if you have a living room computer that you sometimes use to send business emails, you would need those emails to be more than half of that use. Suppose your kiddo is playing Minecraft on your personal property between emails. In that case, you might have a difficult time proving the deduction.

Applying Section 179 to Stone Machinery

Thankfully, many businesses who work with stone equipment can apply section 179 to their real property. This deduction considers the physical machines you use. That means section 179 is easy to apply any type of stone equipment.

Examples of Stone Equipment (and General Things) You Can Depreciate:

CNC routers
A utility vehicle used to transport the stone
A terrazzo polisher
A Beveling or polishing spindle
Any equipment used in the production of marble tiles
The coffee machine you have at your home office
The computer your staff uses to manage your company’s website
The computer software that you use to make running your business easier
Alarm systems you install at your construction sites

Because the Section 179 Deduction exists to encourage businesses to invest in themselves, you can reduce your taxable income based on necessary and support equipment.

Bonus Depreciation and Section 179

Once you run out of expensing off costs through 179, your next step is bonus depreciation. Bonus depreciation is anything in addition that qualifies for additional deductions beyond that $3.6 million mentioned earlier.

The bonus which exceeds 179 can be a specific percentage of the costs associated with the qualifying property. Rates are 30, 50, or 100, depending upon the current year. Given the struggles of 2020 that have continued into the current year, bonus depreciation for 2021 is 100%.

That means you can write off 100% of the cost for any eligible property. This property includes the following:

Property that qualifies for modified accelerated cost recovery (MARCS) with a recovery period of 20 years (or less)
Business use software which depreciates
Property for water utility use
Leasehold qualified improvement property

Do All Vehicles Qualify for Section 179?

To reduce your taxable income, section 179 applies to vehicles purchased explicitly for business use. Stone machinery operators can expense vehicles purchased for product delivery. These vehicles may include cargo vans, light- or heavy-duty trucks, and heavy construction vehicles.

Those who work in construction can receive incredible benefits from this area. You can even expense passenger vehicles provided you can prove that they are used primarily for work. However, they do limit SUVs to $25 thousand.

Other Important Areas Worth Mentioning for Stone Machinery Owners

The two main areas of the property to be considered are tangible property and computer software. This section specifically refers to property purchased for the use of a business. If you buy the property from someone with whom you have a close relationship, it may not qualify.

You also cannot acquire this property from an estate and immediately write it off. The same rules apply to partnerships, sole proprietorships, and S-corporations as “controlled groups.” Check out the legal terminology for details.

Final Thoughts

For those who operate stone machinery who need an upgrade, Section 179 ensures it is an excellent time for you to invest in new equipment. The section allows for the immediate depreciation of the entirety of an equipment’s costs upfront. This expense strategy can plummet your taxable income, giving you more money in the following years.

Suppose you are looking for new equipment for your stone industry business. In that case, Stone Machinery Direct supplies buyers and sellers with a way to save more by allowing for used stone equipment. Contact us today to make an offer and find the equipment you need.