You have a great partner with your capital expenditure program that you might not be taking advantage of.

That partner is Uncle Sam, the Internal Revenue Service.

Are you taking advantage of all that the IRS has to offer?

In particular, one that is sometimes missed and is, perhaps, the sweetest program is the section 179 deduction. This is where you get to deduct capital expenditures up to a certain dollar amount, roughly $100,000, during a given year. Rather than having to depreciate these over an extended period of time, Uncle Sam is letting you take a full deduction right upfront for capital expenditures up to the certain dollar amount. It’s a great way to save on taxes and reduce the net cost of some of you capital expenditure programs.

Another area that Uncle Sam is certainly taking advantage of depreciation for those assets and capital expenditures that you have acquired that go above your limits for the section 179 deduction. Check with your tax advisor to make sure you’re using the most aggressive depreciation that you can and getting tax deductions as soon as possible for these.

So to maximize the use of the section 179 benefit, do the following:

1. Check your total capital expenditures for the year against your cap. If you think you might be running short, consider if there are expenditures that you could move up from your capital plans for the next year.

2. Check previous returns and make sure that you’ve taken full advantage of section 179. If you haven’t, it might be worthwhile to go back and amend your return.

So, make sure you’re using Uncle Sam to the fullest extent you can with your capital expenditure program. The tax savings you can generate can help take some the bite out of your capital expenditure program.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value