Attention Small Businesses!
Are you a small business or farmer and looking to purchase a new commercial trailer? Then you can save money by taking advantage of the 2019 Section 179 Tax Deduction. Whether you’re in the market for a Mobile Office Trailer, Mobile Command Center, heavy-duty dump trailer, 5th wheel gooseneck trailer,mobile restroom trailers, or emergency shower trailers, you may qualify for the Section 179 Tax Deduction if you use your new trailer for commercial use for more than 50% of the time. Read below for more information about Section 179 Deduction and how you can save on your new trailer.
What is the Section 179 Deduction?
The Section 179 IRS tax code allows businesses to deduct the full purchase price of qualifying equipment that are purchased or financed during the tax year. Section 179 was created with the small business in mind, to encourage them to invest in themselves and help expand their business.
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What is the Section 179 Deduction
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 themselves. Today, Section 179 is one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.
Here’s How Section 179 works:
In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it. And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year. This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2018 tax return (up to $1,000,000).
Limits of Section 179
Section 179 does come with limits – there are caps to the total amount written off ($1,000,000 for 2018), and limits to the total amount of the equipment purchased ($2,500,000 in 2018). The deduction begins to phase out on a dollar-for-dollar basis after $2,500,000 is spent by a given business (thus, the entire deduction goes away once $3,500,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.
All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2018 should qualify for the Section 179 Deduction (assuming they spend less than $3,500,000).
For basic guidelines on what property is covered under the Section 179 tax code, please refer to this list of qualifying equipment. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2018 and December 31, 2018.
When Disaster Strikes:
In the event of accidental exposure or contamination by chemicals or asbestos, a portable safety Emergency Shower Trailer provides a quick, essential decontamination resource that allows workers to flush any part or all of their body within seconds of exposure. OSHA has adopted several regulations & requirements that refer to the use of emergency eyewash & shower equipment. The primary regulation is contained in 29 CFR 1910.151, which requires that, “…Where the eyes or body of any person may be exposed to injurious corrosive materials, suitable facilities for quick drenching or flushing of the eyes and body shall be provided within the work area for immediate emergency use.”
This trailer allows you to bring the Emergency Shower Station to the emergency if it happens far away from your normal facilities! A portable Emergency Shower Trailer for your oil field, construction or other industrial job sites provide on-the-spot, first line of defense to protect workers in the event of a chemical-related accident. When work site safety is a priority, ensure that if an emergency arises you’re prepared.
These emergency shower trailers feature high-quality components, such as being manufactured with product quality and longevity in mind. Our Emergency Shower Trailers are extremely versatile and mobile, designed to fit in virtually any location! Personal protective equipment (PPE) items such as gloves, safety glasses, shoes, hard hats and coveralls all help minimize injuries. Still, in the event of accidental exposure or contamination by chemicals, a portable safety Emergency Shower Trailer provides a quick, essential decontamination resource that allows workers to flush any part or all of their body within seconds of exposure. The Emergency Shower Trailer is Section 179 Deductible as a full-time use business vehicle!
What’s the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is offered some years, and some years it isn’t. Right now in 2018, it’s being offered at 100%. The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,500,000) on new capital equipment. Also, businesses with a net loss are still qualified 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 had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
Section 179’s “More Than 50 Percent Business-Use” Requirement
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179. https://www.section179.org/section_179_deduction
Mobile Office Trailer
Is the cab of your Ford F150 doubling as your mobile office on job sites? Are you sick of your job site office trailer being disposable, uninsulated, and costing your company way more than it should, despite tax write-offs? Are you ready for a rugged office trailer that holds up to all of the miles and job sites that you can throw at it? If you are done with being ordinary, done with the chaos of your truck cab being your office, done with disposable location trailers, contact Diamond Specialty Vehicles! We will work with you to custom design the Office Trailer that meets all of your needs for your team in your industry! You will be amazed at the quality of our office trailers and at how much easier and more efficient your team will be when you step into your custom designed specialty office trailer! The mobile office trailer we customize for you should be available for the Section 179 Deduction!
Why Depreciation Deduction?
“When you buy personal property for your business, such as a car or computer, which lasts for more than one year, you are required to deduct the cost a little at a time over several years. This process is called depreciation. Depending on the property involved, it can take anywhere from three to 39 years to fully depreciate the cost of business property.
In an ongoing effort to help small businesses, small business owners have been allowed to claim first-year bonus depreciation for qualifying personal property used for business purposes. Using bonus depreciation, you can deduct a certain percentage of the cost of an asset in the first year it was purchased, and the remaining cost can be deducted over several years using regular depreciation or Section 179 expensing. For tax years 2015 through 2017, first-year bonus depreciation was set at 50%. It was scheduled to go down to 40% in 2018 and 30% in 2019, and then not be available in 2020 and beyond.
The Tax Cuts and Jobs Act, enacted at the end of 2018, increases first-year bonus depreciation to 100%. It goes into effect for any long-term assets placed in service after September 27, 2017. The 100% bonus depreciation amount remains in effect from September 27, 2017 until January 1, 2023. After that, first-year bonus depreciation goes down as follows:
- 80% for property placed in service after December 31, 2022 and before January 1, 2024.
- 60% for property placed in service after December 31, 2023 and before January 1, 2025.
- 40% for property placed in service after December 31, 2024 and before January 1, 2026.
- 20% for property placed in service after December 31, 2025 and before January 1, 2027.
Bonus depreciation is optional—you don’t have to take it if you don’t want to. But if you want to get the largest depreciation deduction you can, you will want to take advantage of this option whenever possible. You can also use bonus depreciation to increase the amount of first-year depreciation available for business vehicles by $8,000.
Property qualifies for bonus depreciation only if:
- it has a useful life of 20 years or less (this includes all types of tangible personal business property and software you buy, but not real property, and
- you purchase it from someone who is unrelated to you (it can’t be a gift or inheritance).
Under prior law, you could only use bonus depreciation for new property. The Tax Cuts and Jobs Act has changed that rule and now you can use bonus depreciation for purchases of new or used property starting in 2018.
In addition, if the asset is listed property, it must be used more than 50% of the time for business to qualify for bonus depreciation. Listed property consists of automobiles and certain other personal property. Computers were listed property under prior law but starting in tax year 2018, they are no longer classified as listed property so there is no over 50% use requirement.
Bonus depreciation differs in some important ways from Section 179:
- it is not subject to an annual dollar limit
- the property need not be used over 50% of the time for business, unless it is “listed property” such as automobiles, cameras, and certain other personal property, and
- it is not limited to annual business profit.
Often, the same asset will qualify for Section 179 expensing and bonus depreciation. In this event, you decide what method to use or you may choose to combine depreciation methods. If you decide to claim Section 179 expensing and bonus depreciation for the same asset, you must use Section 179 first, then bonus depreciation, and then regular depreciation (if needed).
Placed in Service Rule
You can take full advantage of Section 179 and bonus depreciation if you purchased qualifying property for your business any time during the tax year. Unlike with regular depreciation, you need not reduce your deduction if you purchased property late in the year.
However, Section 179 and bonus (and regular) depreciation are only available for business property you placed in service during the tax year. Property is “placed in service” when it’s ready and available for its assigned function in your business. As long as it is available for such use, you don’t have to actually use the property for business during the year to take depreciation.” -By Stephen Fishman, J.D
- Conference Trailers
- Office Trailers
- Command Center Trailers
- Emergency Shower Trailers
- Mobile Blood Draw Trailers
- Sanitation Trailers
- Restroom Trailers
- Fire Safety Trailers
- Marketing Stage Trailers
- Marketing Road-Show Trailers
- Hair & Makeup Trailers
- Studio Talent Trailers
- Incident Command Trailers
- Emergency Response Command Trailers
- Oil Field Office Trailers
- Military Mobile Command Center Trailers
- Portable Dressing Room Trailers
- Celebrity Dressing Room Trailers
- Mobile Green Room Trailers
- Wardrobe Trailers
- VIP Lounge Trailers
- Mobile Client Lounge Trailer
- Energy Command Center Trailer
- AND MORE!
- If your business is looking for a Custom Specialty Truck or Trailer built for your specific industry needs, contact Diamond today and ask about your eligibility of the Section 179 Deduction!
“Understanding these changes to the Section 179 tax deduction will be abundantly useful to any small business owner planning purchases throughout the year.
Consult a tax professional to understand the new tax laws and how they might affect your business.
Key questions include what kind of equipment or software purchases could be most beneficial to your business, especially with the updated list of expenses covered by the deduction.
Review your budget and determine the best approach for financing or purchasing new equipment. Use financial modeling to estimate the tax savings resulting from each approach.
As always, think about the tax savings for your business. Review various financial strategies to optimize your savings or growth.”
Section 179 Tax Deduction
“Let’s talk about the Hummer Loophole since that is where most taxpayer confusion comes from. Yes, at some point, long ago, in a galaxy far far away, businesses could buy heavy trucks and deduct them 100%. Was this a loophole of sorts? Yes. Does Congress and the IRS like loopholes? Not really, unless it benefits them. Did Congress and the Joint Committee on Taxation change the Hummer Loophole? Yes. What is the current state of affairs in 2018 after TCJA? Good question, read on (sneak peek, we are back to 100% for heavy trucks… Hummers for everyone Oprah!).
Let’s talk about which business vehicles are eligible for 100% Section 179 deduction under the current 2018 tax laws after the Tax Cuts and Jobs Act of 2017. The following trucks and business vehicles qualify for 100% deduction in Year 1-
- Vehicles that can seat nine-plus passengers behind the driver’s seat (i.e.: Hotel / Airport shuttle vans, etc.).
- Vehicles with: (1) a fully-enclosed driver’s compartment / cargo area, (2) no seating at all behind the driver’s seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
- Heavy construction equipment will qualify for the Section 179 deduction, as will forklifts and similar.
- Typical “over-the-road” Tractor Trailers will qualify.”
Known for our custom flexibility, we are the 1st choice for dealers! Many dealers have discovered a demand in a niche market, needing products built to exact specifications, and we have been able to provide products for them that not only meet their needs but also over-exceed their expectations! All of our trailers are made by leaders, innovators, and craftsmen to be of the highest quality and durable rugged engineering. From the solid chassis and the fiberglass exterior to the hardwood and fiberglass cabinets, each has proven to withstand the test of day-to-day use and long miles traveled over rough and underdeveloped roads. We want to be your partner!
Please contact your tax professional prior to purchasing your Diamond Specialty Vehicles to find out if these tax savings are available for your business.
Get all of your Section 179 deduction questions answered here, at the official site.
Disclaimer: Diamond Specialty Vehicles does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisers before engaging in any transaction.