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Tax Incentives

TAX INCENTIVES - GAS STATION EQUIPMENT FINANCING & LEASING

Did you know how Section 179 and Bonus Depreciation may allow you to immediately capture depreciation capital expenditures from gas station equipment financing and leasing?

Business owners usually prefer to deduct equipment cost in a single tax year, rather than a little at a time over a number of years. These deductions are known by their sections in the tax code, Section 179 and Bonus Depreciation deductions. 

 

Limits of Section 179

Section 179 includes a limit to the overall amount of the equipment purchased ($2,500,000 in 2019) and limits the total spending write-off to $1,000,000 in 2019. After $2,500,000 is spent, the deduction begins to pay out on a dollar-for-dollar basis and is eliminated once it reaches $3,500,000 in purchases.

 

What is the difference between Section 179 and Bonus Depreciation?

Bonus Depreciation is not offered every year, it varies from year to year. Currently in the year of 2019, it is offered at 100%.

Section 179 Deduction covers both new and used equipment, meanwhile Bonus Depreciation has only qualified the new equipment until recently. Due to the passing of the recent tax legislation, Bonus Depreciation has now expanded coverage on to the used equipment.

Large businesses that spend more than the Section 179 Spending Cap ($2,500,000 in 2019) on new equipment, may benefit more from Bonus Depreciation. Additionally, businesses that experience a net loss are still qualified for some deductions of the new equipment cost and carry on the loss in the future years.

Generally, Section 179 is taken first, followed by Bonus Depreciation unless the business had no taxable profit recorded in which case it will carry-forward the loss.

Please contact your tax advisor to learn about the specific tax benefits that your C-Store may realize from Section 179 and Bonus Depreciation. 

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