Machines in Stock for Section 179 Tax Deduction
Summer Cline 10.01.2019
As we approach the final months of 2019 many companies are working to purchase capital equipment that qualifies for Section 179 bonus depreciation. Companies that can get this expense on the books in time will benefit greatly from this tax incentive. At Okuma, we’ve been working diligently, along with our distributors, to make sure we offer a great selection of machine tools to choose from so you can take advantage of this program.
Tim Thiessen, Vice President of Sales & Marketing, and Summer Cline, Vice President of Finance, Okuma America Corporation
Deadline: December 31
Purchases of Okuma machine tools DO qualify for Section 179. We have certain models available that can be purchased (or leased/financed) and placed into service in time to meet the program deadline of December 31st. It’s important to realize that you don’t get to claim the tax expense just because you put in an order; you get the tax expense when that machine tool/software is purchased and delivered. This means the time to act is now, so you can be sure to take delivery by the end of the year.
Substantially Decrease Your Purchase Price
Businesses are allowed to deduct the full amount of the purchase price of equipment. The deduction limit for Section 179 is $1,000,000 for 2019 and beyond, while the limit on equipment purchases remains at $2.5 million. By deducting the full cost, you substantially decrease the amount you pay for machine tools and/or software.
Great Benefits for Leasing and Financing
You can enjoy great benefits if you choose to lease or finance your equipment/software using Section 179 Qualified Financing. When using this option, you can deduct the full amount of the equipment/software, without paying the full amount this year. This means the amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction.
When leasing or financing, the amount you save in taxes can exceed the payments, making this a very bottom-line friendly deduction.
MACHINE INVENTORIES WILL BECOME LIMITED
It’s important to realize that, if you wait until the end of the year, there tends to be a big scramble to get things done, especially with the holidays approaching. Personnel availability may become more limited, and you may have difficulty getting all the proper documents signed. Machine inventory will definitely become more limited. So now is the time to focus on what you can procure and get delivered by the end of the year.
PLAN YOUR PURCHASE
A great place to start is by taking inventory and doing some planning around what types of machine tools you’re going to need. Planning is crucial because sometimes accommodations need to be made in your facility to be ready to receive a machine tool. You don’t want to be surprised by this at the last minute! Getting your space planned out is something that takes time, which means you should take steps now to ensure a smooth process.
REVIEW OUR LIST OF AVAILABLE MACHINE TOOLS
We’ve intentionally taken steps to make sure we have the right machines in stock that can fit your business needs. Our distributors have access to a real-time list of Okuma machine tools that are available to be delivered to your facility by the end of this year; currently there are more than 500 machines on this list. We also have service teams ready to assist with installations in your area. I recommend contacting your distributor soon to start reviewing your options so you can maximize your benefits from this program.
About Summer Cline
Summer Cline is Vice President of Finance for Okuma America Corporation, a world-leading builder of CNC (Computer Numeric Control) machine tools, founded in 1898 in Nagoya, Japan. Okuma is the industry’s only single-source provider, with the CNC machine, drive, motors, encoders, and spindle all manufactured by Okuma. The company also designs their own CNC controls to integrate seamlessly with each machine tool’s functionality.