When it comes to IRS tax code, there are few rules that are as beneficial for small to medium-sized businesses as Section 179. This handy piece of code enables studio owners and music makers to pick up new gear before the end of the year and deduct the price from their 2021 gross income.
If you're wondering, "How does Section 179 work?," we're more than happy to help explain how you can maximize your investment in new studio gear. In fact, it's actually really simple and the savings can have a drastic effect on your bottom line. Let's dive into what Section 179 is all about.
What is Section 179?
Section 179 "allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year." This means that if you purchase a piece of equipment or large package from Vintage King before December 31st, 2021, you can deduct the full purchase price (up to $1,050,000) from your gross income of this year.
What If I'm Leasing Or Financing My Purchase?
If you're leasing or financing gear through Vintage King, you can still take advantage of Section 179. In many cases, if you are leasing or financing a purchase, you can still claim some or all of the deduction upfront. By doing so, you could end up with $0 or less out of pocket in your first year of owning your new equipment and have it up and running in your studio before any net payments are due.
Are There Limits To Section 179?
Yes, Section 179 has its limits. As mentioned previously the cap to the total amount written off is $1,050,000 for 2021. The limit to the total amount of equipment that can be purchased for 2021 is $2,620,000. After $2,590,000, the deduction "begins to phase out on a dollar-for-dollar basis." Once $3,670,000 is reached the deduction goes away all together, as this is meant for businesses that are small to medium in size.
How Can Vintage King Help?
For over 25 years, Vintage King has specialized in helping build, design, and outfit recording, mixing, and mastering studios. If you're ready to add to your studio before the end of 2021, our team of Audio Consultants are here to help and advise on gear purchases.