With Section 179 part of the tax cut which is due to expire this year in the U.S., Watchfire Signs, Danville, Illinois, manufacturer of digital signs and billboards, kindly made us aware via a White Paper how to leverage Section 179 benefits and write off the cost of a digital billboard.
Passed in January 2013, the American Taxpayer Relief Act of 2012 extended the Tax Relief Act of 2010, thereby reinstating the 50% depreciation bonus through 2013. The Act also reinstated the Sec. 179 expensing levels to $500,000 through 2013 with a graduated phase-out once qualified capital expenditures exceed $2 million in the 2013 tax year.
This basically means that, if a buyer spends up to $500,000 on qualifying equipment and installs it by the end of this calendar year, he can write off $500,000. Then the buyer gets 50% bonus depreciation on anything over that $500, 000 up to $2 million.
Of course, the more depreciation you claim now, the less you will be able to claim later. In other words, your tax bill in future years will be higher because you’ll have less to deduct. However, by lowering your taxable income, the depreciation bonus and Sec. 179 can dramatically cut your 2013 tax bill, freeing up cash in the short term.
The sign has to be new. The deduction, for 50% of the basis, applies to qualified property placed in service after Dec. 31, 2012 and before Jan. 1, 2014.
If you have been thinking about installing a new digital sign or billboard, you might want to speak to your accountant about taking advantage of this possibility. And we’re sure that Watchfire – recently acquired by The Jordan Company – would make its Whitepaper available.