Irs Section 179 Again Offers Incentive to Purchasers of Packaging Equipment
IRS Section 179 Again Offers Incentive to Purchasers of Packaging Equipment
For some, this article may cause a sense of deja vu, in that we have been discussing Section 179 of the tax code along with bonus depreciation for what seems like a decade now. However, given the benefits of these tax laws, we would like to keep discussing them for years to come and we believe that a quick refresher in this area is merited. Keep in mind that these tax laws have been set to expire for some time now, but the deadline has once again been pushed back - this time to December 31st, 2013. For those companies contemplating new packaging equipment, Section 179 and Bonus Depreciation offers good reason to act now.
The IRS Tax Code, specifically Section 179, allows packaging companies to deduct the full purchase price of packaging equipment such as a new filling machine, a power conveyor system, bottle cappers and more, for the current tax year. Interestingly, the amount of expensing and depreciation were just starting to decrease before the famous "fiscal cliff" legislation. However, the lower 2012 limits were retroactively raised and the 2013 numbers apparently will remain the same. In other words, if a company buys a new (or used) liquid filler in 2013, under the right circumstances, that company can deduct the full purchase price of the filling machine in Year 1. The end result is somewhat like a delayed, but very significant, discount to the actual price of the machine. For a good visual on the savings, check out the chart at section179.org.
The Bonus Depreciation part of the tax incentives are generally in place for companies that make massive purchases above and beyond the limit allowed under the Section 179 deduction (the IRS does set limits on the expensing under Section 179.) So if a company had spent over the 2 million dollar cap set by the Internal Revenue Code, but still needed a power conveyor system, some tax incentive would still be available. Bonus depreciation only works for new equipment and other restrictions apply, but the 50% allowed can also reduce the actual price paid for such equipment.
Keep in mind, Liquid Packaging Solutions is not a law firm or an accounting firm. We get the gist of IRS Section 179 simply because both our company and our customers have benefited from these incentives! All we can really say for certain is that these code sections, set to expire every year for the past four or five years, offer great incentives to those looking to purchase packaging equipment. But any company considering the purchase of new machinery in 2013 should speak with their tax advisors to insure that the incentives offered by Section 179 are used to the fullest.