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Gain Substantial Tax Benefits in 2011

Acquire your equipment now for significant tax benefits and lease financing flexibility.

Section 179

According to the new Small Business Jobs Act of 2010, passed on September 27, 2010, Section 179 may allow you to deduct the entire value of your equipment purchased in 2010 and 2011. The Section 179 allowance has been temporarily increased to $500,000 for taxpayers with total capital investments of $2 million or less. The increased allowance applies to units contracted for and put into service through December 31, 2011. The balance of equipment investment above $500,000 may be eligible for Bonus Depreciation as well as Standard MACRS depreciation. In 2012, the Section 179 allowance will be reduced to $125,000, and the capital investment limit to $500,000.

Example of $25,000 write-off using the Section 179 Expense Allowance:

Purchase Price	$25,000
1st Year Section 179 Expense	$500,000
Total 1st year deduction	$25,000
Potential 1st year tax savings (35% tax bracket)	$8,750
After tax cost of equipment	$16,250

Bonus Depreciation

You may also be able to reduce your taxable income by taking advantage of the recently enhanced Bonus Depreciation allowance. New, qualifying equipment purchased on or after September 9, 2010 and before January 1, 2012, net of any Section 179 allowance, can be depreciated at 100%. New, qualifying equipment purchased in 2012, net of any Section 179 allowance, can be depreciated at 50%. In addition, MACRS depreciation can then be taken on the cost less the amount of the bonus depreciation.

Example of $25,000 write-off using 100% Bonus Depreciation:

Purchase Price	$25,000
100% Bonus Depreciation ($25,000 x 100%)	$25,000
Total 1st year deduction	$25,000
Potential 1st year tax savings (35% tax bracket)	$8,750
After tax cost of equipment	$16,250

How much will you save?

Contact your accountant or financial advisor today to find out more about the new tax law changes and specific benefits that you may receive when purchasing new equipment.

Example of $650,000 write-off using Section 179 and 100% Bonus Depreciation:

Purchase Price	$650,000
1st Year Depreciation Under Section 179 Expense	$500,000
100% Bonus Depreciation ($150,000 x 100%)	$150,000
Total 1st year deduction	$650,000
Potential 1st year tax savings (35% tax bracket)	$227,500
After tax cost of equipment	$422,500

IMPORTANT: Agricredit does not provide or offer accounting, tax, or legal services. You should always seek the advice of a qualified tax advisor.