Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment 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.

Practices Equipment (Including Software)

Section 179 allows practices to deduct equipment purchased (software, computers, machinery) in a single tax year as oppose to over multiple years. For 2011, Congress has increased this deduction amount to $500,000. Under Section 179, practices that spend up to 2 Million a year on qualified equipment, may write-off up to $500,000. The rules are designed for small companies.

Benefits:

The benefit of IRS tax code - Section 179 is that a practice can depreciate up to $500,000 if the equipment is purchased in 2010 & 2011. Practices that acquire equipment through paying Cash or through an Equipment Finance Agreement (i.e. Loan) or a Capital Leases can use IRS tax code - Section 179.

Example of investment:

• Cost of the Equipment/Software:   $150,000
• Section 179 Depreciation Write Off: $150,000  
• Tax Rate Assumption: 35%  
• Tax Savings on Your Equipment:   $ 52,500 ($150,000 times 35%) 
• Net Cost of Equipment After Write- Off:   $ 97,500

If a company finances or leases the equipment, they can take the entire deduction this year, while only paying out a small portion. So Section 179 can literally result in net positive dollars deposited in a company’s bank account - giving a substantial boost to a company’s bottom line this year. But to get the deduction for tax year 2010, you have to act now, as once the clock strikes midnight on 12/31/2010, Section 179 can't affect your 2010 profits anymore.

Source: www.section179.org