This year’s Internal Revenue Service (IRS) Section 179 business expense deduction limit is set at $108,000, so physicians may want to purchase medical equipment before December 31st. In April, they will be able to count the eligible equipment acquisitions in this fiscal year, so says Jeff Russell, CEO of Oakridge Healthcare, a company that provides health care financing solutions to medical practices and equipment vendors throughout North America.
“Many medical practices operate on the principle that purchase costs for equipment and furniture must be depreciated over a number of years for tax purposes,” says Russell. “This, however, is often not the case. In order to stimulate economic growth, the IRS Section 179 states: ‘You may elect to expense part or all of the cost of Section 179 property that you placed in service during the tax year and used predominately (more than 50%) in your trade or business.’”
Before 2003, the Section 179 deduction for each piece of equipment was limited to $25,000. With the Jobs and Growth Act of 2003, the Section 179 small-business expensing limit increased to $100,000. For this year, the amount has increased to $108,000. The caveat is that the item must be in use by year-end. The expensing-limit increase will expire and return to its previous level of $25,000 after 2007 if there is no additional action by Congress.
Russell says that eligible business purchases include: medical equipment of all types, electronics (intense pulsed- light devices, lasers, computers), software, and furnishings (treatment tables, chairs, cabinets).
Ineligible purchases include: real estate and investment property and property of all types held in trust or estates, including equipment and machinery.
Detailed information on Section 179 deductions can be found on the IRS Web site in Publication 946: How To Depreciate Property.
“If a physician has been delaying the purchase of medical equipment, this may be the ideal time to take the plunge,” says Russell. “Since many equipment manufacturers are anxious to clear out stock by December 31, the physician may not only get a great tax break, but a great deal as well.”
[www.emediawire.com, November 10, 2006]