Significant Tax Benefits if the BioLumix System is Purchased Prior to the End of Year!

The BioLumix Advantage

BioLumix can help internalize the microbiology testing or make the existing microbial testing simpler, faster and automated- saving you significant time, labor and money. With BioLumix you can test raw materials, in-process and finished products as well as processed water and environmental testing.  The system can analyze tablets, capsules, powders, liquids and viscous material without any product interference and automatically generate a certificate of analysis.

While enjoying all these advantages you can take advantage of the IRS Section 179 deduction, if Agreements are reached to purchase a BioLumix System prior to the end of this year.

Most people think the Section 179 deduction is some mysterious or complicated tax code.  It really isn’t, as you will see below. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.  That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.  It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in their company.

2012 Limit on equipment purchases = $560,000.
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced.

 

Bonus Depreciation = 50%
This is taken after the $560k limit in capital equipment purchases is reached. Note: Bonus Depreciation is available for new equipment only. Bonus Depreciation can also be taken by businesses that will have net operating losses in 2012.

 

Now is the Time

The first-year bonus depreciation, which applies to new business equipment, has been set at 50 percent through 2012, and will drop to zero percent starting January 1, 2013. Lastly, the current cap on total capital equipment purchases is $560,000, and will decrease to $200,000 in 2013.

Here is an example of Section 179 at work:

 

 

Who Qualifies for Section 179?

All businesses that purchase, finance, and/or lease less than $560,000 in new or used business equipment during tax year 2012 should qualify for the Section 179 Deduction. If a business is unprofitable in 2012, and has no taxable income to use the deduction, that business can elect to use 50% Bonus Depreciation and carry-forward to a year when the business is profitable.  The deduction begins to phase out if more than $560,000 of equipment is purchased – in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses. However, as noted above, large businesses can expense all qualifying capital expenditures with 50% Bonus Depreciation for the 2012 tax year.

 

What’s the difference between Section 179 and Bonus Depreciation?
The most important difference is both new and used equipment qualifies for the Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation covers new equipment only. Bonus Depreciation is useful to very large businesses spending more than $560,000 on new capital equipment in 2012. Also, businesses with a net loss in 2012 qualify to deduct some of the cost of new equipment and carry-forward the loss. When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business has no taxable profit in 2012 because the unprofitable business is allowed to carry the loss forward to future years.

This is not legal, tax or financial advice.  You should consult with your tax advisor for the specific impact to your business.  For additional information, please visit www.irs.gov.  The information above is an overall, “simplified” view of the Section 179 Deduction for 2012. For more details on limits and qualifying equipment, please consult your tax attorney or financial advisor.

 

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