One of the most popular topics in our “Million Mile Migration Madness” tour concerns the economic motivations to upgrade your Windows XP, Server 2003 and Office 2003 infrastructure fast-fast! Here is why: Section 179. I start with a question:
What section of the US Tax Code, often called “The Hummer or SUV Deduction”, allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated. This property is generally limited to tangible, depreciable, personal property which is acquired by purchase for use in the active conduct of a trade or business?
The answer is a Section 179.
The original intent was to spur investment. During the Great Recession – the amount you could deduct upfront grew significantly to $500,000 USD. On January 1, 2014, this amount is reduced by 95% down to $25,000. It impacts you this way: your SMB IT migration project most likely qualifies for the Section 179 deduction, something you and your customers can enjoy right now. More on qualifications below. But you need to start your migration project NOW and have the IT assets placed “in service” before December 31, 2013. The term “in service” is in the eye of the beholder, but I’d suggest those new Lenovo devices be booted and you’ve installed the operating system and Office 2013. You do not need to complete your migration before December 31, 2013 (essentially just start it). And with all due respect, your migration project for any SMB will likely exceed $25,000 in total costs.
What is a Section 179?
- Equipment (machines, etc) purchased for business use
- Tangible personal property used in business
- Business Vehicles Weighing More Than 6,000 lbs
- Computers & Computer "Off-the-Shelf" Software
- Office Furniture
- Office Equipment
- Property attached to your building that is not a structural component of the building (i.e.: a printing press, large manufacturing tools and equipment)
- Partial Business Use (equipment that is purchased for business use and personal use: generally, your deduction will be based on the percentage of time you use the equipment for business purposes).
- Can include certain kinds of leases…. THIS IS HUGE!!!
I end with a standard disclaimer: Visit http://www.Section179.org or Talk to Your CPA for More Information.
