Know More: Leasing, Reasons to lease, Section 179

Shawn Halladay, www.leasingnotes.com

Under Section 179 of the IRC, you can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is called the Section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by deducting the MACRS. To qualify for the section 179 deduction, the property must be tangible personal property. single purpose agricultural (livestock) or horticultural, structures, storage facilities (except buildings and their structural components) used in connection with distributing petroleum, and off-the-shelf computer software.

For those of you who use Section 179 of the IRC as part of your sales pitch, make certain that you are using the right dollar amounts. The maximum Section 179 deduction for 2006 is $108,000.

This amount increases to $143,000 for qualified enterprise zone property. If you are placing qualified Section 179 Gulf Opportunity Zone property into service, the limit on the section 179 deduction is increased by the smaller of100,000, or the cost of qualified GO Zone property placed in service during the year. All these amounts are limited by the amount of total property placed in service during the year. There are limits also on the Section 179 deductions for heavy sport utility vehicles.

Also keep your eye open for tax credit opportunities as you talk with your customers, as certain types of equipment have tax credits associated with them. Although the Investment Tax Credit (ITC) has not been available since 1986, there has been a steady stream of tax credits enacted for different types of property and activities over the years. Some of the types of equipment that have tax credits and extra deductions of which you can take advantage include:

* Interior lighting systems, heating, cooling, ventilation, and hot water systems that are part of energy efficient commercial buildings

* Advanced lean burn technology vehicles, qualified alternative fuel vehicles, qualified fuel cell vehicles, or qualified hybrid vehicles

* Alternative fuel vehicle refueling property such as property used to store or dispense clean burning fuel or recharge motor vehicles propelled by electricity

* Energy property used in business such as qualified fuel cells, stationary microturbine power plants, and equipment that uses solar energy for illumination

* Advanced coal and gasification projects

These are select opportunities, but they do shelter taxes very efficiently, so good hunting!

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