TECH FINANCIAL SERVICES

The Section 179 Federal Income Tax Deduction has been changed as part of the American Recovery and Reinvestment Act and it allows a company to deduct the first $139,000 of equipment (Section 179 Property) purchased in 2012 from their taxable income. For companies purchasing (or leasing – with a $1.00 buy-out lease) up to $560,000 of equipment in 2012, this deduction is available in full. It then phases out on a dollar-for-dollar basis between $560,000 and $699,000 and it is not available for companies purchasing over $699,000 of equipment in 2012. However, companies can finance purchases over $699,000 with an operating lease and may still be able to claim this deduction.

50% First Year Bonus Depreciation

The American Recovery and Reinvestment Act of 2012 also allows for a special 50% Bonus Depreciation for NEW equipment placed in service during 2012 for the production of income before January 1, 2013. This deduction allows an additional 50% first-year depreciation on the adjusted basis of qualified new equipment.

EXAMPLE OF 2012 TAX STIMULUS

$500,000 New Machinery Equipment Acquired in 2012

$139,000 Extended Section 179 Deduction

$180,500 50% Bonus Depreciation of the Balance of $361,000

$25,793.45 14.29% Standard Depreciation

$345,293.45 Total First Year Deduction

$120,852.71 Cash Savings based on Company with 35% Tax Rate

Note: Machine tools and fabricating equipment are typically depreciated over 7 years. Please consult with your accountant. The above calculations are only estimates and everyone’s tax situation is different.

For a Printable PDF of this information click here.

Here is a direct link to the newest version of the 2011 Tax Incentive Calculator from Tech Financial. (Excel Spreadsheet)

Section 179 of the  American Recovery and Reinvestment Act for 2011, will now allow a business to expense up to $500,000 of qualified property (new or used) until purchases exceed $2,000,000, above which Section 179 deduction is reduced dollar for dollar up to $2.5M, where it is totally phased out. For 2012, the expensing limit is reduced to $125,000 with an investment ceiling of $500,000.

2011 Bonus Depreciation: 100% bonus depreciation is valid for qualified, new equipment, acquired and placed in service after Sept. 8, 2010 and before Jan. 1, 2012.  The original equipment use must begin with the taxpayer.

Here is a direct link to the newest version of the 2011 Tax Incentive Calculator from Tech Financial. (Excel Spreadsheet)

Tech Financial Services continues to get creative in finding new ways to finance machine tools for industry. For newer or smaller businesses, our underwriters typically ask for personal guarantees on equipment leases. We understand that some people and their business have tight cash flows. We  work diligently to help out in any way possible.

One way to obtain a competitive lease is to manage your credit rating. When you apply to a leasing company for credit, an inquiry is made on your credit, with multiple lease applications requiring multiple credit inquiries. Each credit request will reduce your credit score, so it is in your best interest to minimize credit applications and only pursue leases that are both likely to be approved and will provide favorable terms.

You should know your individual or business credit rating.  We’ve summarized credit ratings below for your reference.

The average American credit score is 692 (November, 2009)

• 775-850 – Excellent – This represents the best score range and best financing terms. The dividing number is 750 as anything above this means you’re a very low risk. Only 13% of the nation’s population has scores above 800.
• 685-774 – Very Good – Qualifies a person for favorable financing. 58% of Americans have credit scores above 700.
• 675-699 – Good – A score in this range will usually qualify for most loans. This range typically represents a consumer with no late mortgage payments and no more than one day late payment on consumer credit.
• 620-674 – Sub-prime – May still qualify, but will pay higher interest. A score above 650 will most likely qualify you for a loan or a lease. For many credit grantors, 620 is considered the bottom dividing line between good and risky credit.
• 560-619 – Risky – Will have trouble obtaining a loan. Nearly 20% of the U.S. population has a credit score under 620. Fall below that and you are likely to be labeled a high risk for a lease, loan, or line of credit.
• 514-559 – Very Risky – Need to work on improving your rating.
• 350-514 – Bad

For more information, refer to the web site below.

www.scoreassist.com provides a free 2010 credit report and scores, plus assists in reading and understanding your credit report, controlling & improving your credit and 
real time disputes of negative items”

The experts at Tech Financial have more that 50 years combined leasing experience, and we know what to look for in financing new or used equipment.

We understand the machine tool industry and our programs will give you the flexibility you require. We offer loans, leases, or a custom tailored alternatives; providing a package that fits within your business plan and best serves your financial needs.

If you have further questions contact us at 414-224-0220 or email Mark with your questions at markc@techfin.net.

Tech Financial is a member in good standing of the American Machine Tool Distributors Association (AMTDA) and has been in the Equipment financing and leasing business for over 23 years. Our combined experience exceeds 50 years in the industry.

We understand the machine tool industry and our programs will give you the flexibility to acquire the equipment you need. Whether you require a loan, a lease, or a custom tailored alternative; we can offer a package that fits within your business plan and best serves your financial needs.

You may find these resources helpful.

The Advantages of Leasing For Machine Shops

Financing and Leasing Programs We Offer

Our Interactive Section 179 Tax Incentive Calculator for 2010

Section 179 Tax Incentive Changes for 2010

Give us a Call! – 800-886-1469

Email Mark – markc@techfin.net