Increased Tax Deductions, 2013: Taking Full Advantage

Thinking of buying a new analyzer or upgrading old equipment? Acting before the end of the calendar year might be in your best interest.

Section 179 of the IRS tax code encourages small business owners to invest in equipment or technology by allowing the deduction of 100% of the asset's value in the first year.

When physician practices acquire new equipment – including lab equipment, analyzers, furniture, certain software and more – they may deduct up to $500,000 of the value during the first year of ownership.

Interestingly, Section 179's threshold was scheduled to be reduced from its limit of $139,000 in 2012 down to a mere $25,000 in 2013. However, as part of the "fiscal cliff" legislation passed at the beginning of 2013, the deduction maximum was actually increased to $500,000. There's no telling what Congress will put in place for 2014 but it's not hard to see where the threshold might be reduced for next year. Practice owners in the market for equipment are well served by considering executing purchases before year end.

Below is a simplified example, using a hypothetical purchase of one or more pieces of equipment totaling $100,000. (The IRS has details and particulars: irs.gov/publications/p946/ch02.html.)

yearendmoney

In any normal year, the November-December timeframe offers one of the best times to make larger investments.  Manufacturers and distributors typically have incentives programs in place for their sales reps, quarterly and annual quotas to meet, and price discounts for you.  This year, add in the very high Section 179 discount threshold of $500,000 - unique for 2013 - and now might be a good time to pull the trigger on lab equipment, a new exam table or off-the-shelf software.