New in 2018, the Section 179 IRS Code now allows businesses to deduct, for the current tax year, the full purchase price of equipment and off-the-shelf software, up to $1 million. Even better, the bonus depreciation is now set at 100% and is made retroactive to 9/27/2017 and is good through 2022. The bonus depreciation also now includes used equipment.
What is the Section 179 Deduction?
Section 179 of the IRS Code dictates that businesses can deduct the full purchase price of qualifying financed or leased equipment and off-the-shelf software.
To qualify, the purchased, financed, or leased equipment must meet the specified dollar limits and be placed into service in the same tax year the deduction will be applied. That means, if you want to apply this tax deduction to your business’ 2018 taxes, you only have until December 31, 2018, to purchase AND install any qualifying equipment or off-the-shelf software.
Which software qualifies?
According to the Section 179 website, software must meet all the following for basic eligibility:
- Purchased or financed with specific qualifying lease or loan.
- Used in your business for income-producing activity.
- Has a determinable useful life.
- Expected to last more than one year.
Three stipulations must also be met:
- Readily available for purchase by the general public.
- Subject to a non-exclusive license.
- Without substantial modification.
Basically, the software cannot be custom code. That means all SOLIDWORKS licenses for all solutions qualify.
What equipment qualifies?
Almost any type of “business equipment” purchased or financed by your company qualifies for the Section 179 deduction as long as it is purchased and put into use between January 1 and December 31 of the tax year you are claiming. Because of this, all Stratasys machines qualify.
Please note: equipment qualifies whether new or used (but must be new to you), and also regardless of whether it was purchased outright, leased, or financed.
For more information about the Section 179 Deduction, visit www.Section179.org or speak with your tax professional.
If you'd like to take advantage of this tax incentive in 2018, contact the SOLIDWORKS and 3D Printing experts at GSC. Our experts can help you determine which software solution or Stratasys 3D printer model will provide the most benefit to your business initiatives.