Recent legislation provides favorable depreciation deductions for new or used eligible equipment purchases. The Section 179 deduction for new or used eligible equipment purchases is now permanent at the $500,000* level. New equipment purchases may be eligible for an additional 50% first-year bonus depreciation deduction through 2017. Application of these favorable tax computations can create a favorable tax break for those who choose to purchase equipment from Oilmen’s Truck Tanks, Inc.
A few examples are listed below:
| Cost of Qualified Equipment
(NEW OR USED EQUIPMENT) |
$250,000 | $500,000 | $1,000,000 | $2,000,000 | $2,500,000 |
| Less Section 179 Deduction
(NEW OR USED EQUIPMENT) |
250,000 | 500,000 | 500,000 | 500,000 | – |
| Amount Eligible for 50% first- year deduction | $ – | $ – | $500,000 | $1,500,000 | $2,500,000 |
| 50% first-year Bonus Depreciation(NEW EQUIPMENT ONLY) | – | – | 250,000 | 750,000 | 1,250,000 |
| Balance Subject to MACRS | $ – | $ – | $250,000 | $750,000 | $1,250,000 |
| First Year Depreciation | $ – | $ – | $50,000 | $150,000 | $250,000 |
| Section 179 Deduction | 250,000 | 500,000 | 500,000 | 500,000 | – |
| 50% first-year Bonus Deprec. | – | – | 250,000 | 750,000 | 1,250,000 |
| Total Deduction | $250,000 | $500,000 | $800,000 | $1,400,000 | $1,500,000 |
| Tax Rate | 35% | 35% | 35% | 35% | 35% |
| Tax Savings (Federal Only) | |||||
| In the First Year | $87,500 | $175,000 | $280,000 | $490,000 | $525,000 |
* The Section 179 deduction begins to phase out when total qualified property purchases exceed $2,000,000. The deduction is reduced dollar for dollar for total qualified equipment purchases over $2,000,000 during 2016. Also the state tax deductions (varies from state to state) may increase the tax savings. The above computations do include certain basic assumptions. All customers of Oilmen’s Truck Tanks, Inc. may not have the same tax scenarios and should get specific advice from their tax professional.
Oilmen’s Truck Tanks, Inc. does not provide legal, accounting, or other professional services, and this material is provided with the understanding that Oilmen’s Truck Tanks, Inc., its employees and officers, are not engaged in rendering legal, accounting, or other professional services. The above material is intended only as a general discussion of the potential tax benefits of Section 179 expensing and/or depreciation. It is not intended to be “Tax Advice”, as that term may be defined in any law or regulation. It should not be relied upon without an independent analysis by a qualified professional, as to the rules which apply to your specific circumstances.
Updated 11/16/16