Section 179 of the IRS tax code is a special deduction which allows the cost of new and used aesthetic devices to be expensed up to $500,000 in the year in which the device is placed into service. This deduction was implemented to encourage business investment in capital equipment as a means to drive economic growth. In past years, this deduction was primarily capped at $25,000, with some temporary allowances for larger deductions.However on December 18, 2015 this deduction was extended permanently at the $500,000 level.
This deduction can be fully expensed, reducing taxable income dollar for dollar relative to the total purchase price. To illustrate, clients in the 35% tax bracket with taxable income in excess of the purchase price, the Section 179 deduction could effectively provide a 35% discount on the purchase price of the equipment. Financing clients can couple this significant deduction with interest expense deduction to see their overall cost of financing be significantly reduced.
In the event that the cost of the aesthetic device exceeds taxable income in the year in which it is placed into service, the deduction can be carried forward indefinitely.
*Disclaimer: This information is for educational purposes, and should not take the place of consulting with a tax professional about your specific tax obligation.