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Fiscally Fit in 2011

Issue: Summer 2011

Dental Owners have unprecedented incentives to invest in their practices! The Small Business Jobs Act of 2010 increased Section 179 dollar and investment limits to $500,000 and $2,000,000 (for 2010 and 2011). The 2010 Tax Relief Act will reduce the Section 179 dollar amount by 75%, reducing the expensing benefit to $125,000 starting January 1, 2012. The Section 179 benefit is scheduled then to be reduced to a $25,000 and $200,000 investment limit in 2013.

Small Business Owners have many benefits to focus on. The 2010 Tax Relief Act is in favorable treatment of off-the-shelf computer software (i.e., Dentrix, DEXIS) as eligible for Section 179 expensing. In addition, there is a 100% Bonus Depreciation (applies to qualified property acquired before January 1, 2012). The qualifying property for the Bonus Depreciation allowance is only available for new property (the original use begins with the practice owner).

The list of tax incentives for both businesses and personal use expiring in 2011 is extensive. There are more benefits than space in this article (i.e., luxury auto depreciation cap, self-constructed property, credit for energy efficient appliances, above-the-line deduction for qualified tuition and related expenses, conversion credit for plug-in electric vehicles, expansion of adoption credit and adoption assistance programs, tax credit for research and experimentation expenses, etc). Thus, it is recommended that practice owners discuss their individual circumstances with their own advisors.

Annual Internal Revenue Code Section 179 Example:

A. Equipment Price Example $300,000
B. Section 179 Deduction $300,000
C. Combined Federal/State Tax Bracket 38%
D. Total 2011 Tax Savings as a Result of Capital Equipment $114,800

This deduction may be available whether you are a sole proprietorship, a partnership, or a corporation (S corps are subject to different rules; again, please check with your advisors). If you plan to acquire equipment in the near future, purchasing it before year’s end is prudent. Utilizing a finance agreement or capital lease to acquire technology or equipment will qualify for this benefit (where true leases or fair market value agreements will not). If you use a finance agreement to acquire your equipment and you have deferred payments, you may file your tax returns and achieve the benefits before you have made any payments.

Don’t wait too long to acquire technology or upgrade your office. Although it is true that you can have equipment placed in service until December 31, 2011 to take advantage of the incentives, waiting too far into the year may mean that you will settle on your technology choices due to diminished year-end selections. Now is the right time to meet with an equipment or technology specialist and discuss acquiring the optimal production-enhancing technology and equipment that will help your practice stay “Fiscally Fit.”

If your business uses a fiscal tax year rather than the calendar tax year, you may have additional time to take advantage of the extended $500,000 Section 179 deduction privilege. For example, if your outfit’s next fiscal tax year will begin on November 1, 2011; the $500,000 deduction deal is available for your current tax year. Plus you’ll get another $500,000 allowance for the following tax year that begins next November 1 and ends on October 31, 2011.

If your business uses the calendar year for tax purposes, you only have until December 31, 2011 to take advantage of the generous $500,000 allowance. Don’t wait to see if the rules for 2012 will change to provide the same opportunity! Act now and take advantage of all the benefits available through this current legislative windfall!

Keith Drayer is Vice President of Henry Schein Financial Services. Henry Schein Financial Services provides equipment, technology, and practice start-up and acquisition financing services nationwide. Henry Schein Financial Services can be reached at 800-853-9493 or hsfs@henryschein.com. Please consult your tax advisor regarding your individual circumstances.

Practice Owners have been provided with historically significant tax incentives through 2011–making this the right time to invest in your practice’s future. The government estimates its cost of enhancing Section 179 is $50 billion alone. Are you poised to seize the opportunity?

Dental Owners have unprecedented incentives to invest in their practices! The Small Business Jobs Act of 2010 increased Section 179 dollar and investment limits to $500,000 and $2,000,000 (for 2010 and 2011). The 2010 Tax Relief Act will reduce the Section 179 dollar amount by 75%, reducing the expensing benefit to $125,000 starting January 1, 2012. The Section 179 benefit is scheduled then to be reduced to a $25,000 and $200,000 investment limit in 2013.

Small Business Owners have many benefits to focus on. The 2010 Tax Relief Act is in favorable treatment of off-the-shelf computer software (i.e., Dentrix, DEXIS) as eligible for Section 179 expensing. In addition, there is a 100% Bonus Depreciation (applies to qualified property acquired before January 1, 2012). The qualifying property for the Bonus Depreciation allowance is only available for new property (the original use begins with the practice owner).

The list of tax incentives for both businesses and personal use expiring in 2011 is extensive. There are more benefits than space in this article (i.e., luxury auto depreciation cap, self-constructed property, credit for energy efficient appliances, above-the-line deduction for qualified tuition and related expenses, conversion credit for plug-in electric vehicles, expansion of adoption credit and adoption assistance programs, tax credit for research and experimentation expenses, etc). Thus, it is recommended that practice owners discuss their individual circumstances with their own advisors.

Annual Internal Revenue Code Section 179 Example:

This deduction may be available whether you are a sole proprietorship, a partnership, or a corporation (S corps are subject to different rules; again, please check with your advisors). If you plan to acquire equipment in the near future, purchasing it before year’s end is prudent. Utilizing a finance agreement or capital lease to acquire technology or equipment will qualify for this benefit (where true leases or fair market value agreements will not). If you use a finance agreement to acquire your equipment and you have deferred payments, you may file your tax returns and achieve the benefits before you have made any payments.

Don’t wait too long to acquire technology or upgrade your office. Although it is true that you can have equipment placed in service until December 31, 2011 to take advantage of the incentives, waiting too far into the year may mean that you will settle on your technology choices due to diminished year-end selections. Now is the right time to meet with an equipment or technology specialist and discuss acquiring the optimal production-enhancing technology and equipment that will help your practice stay “Fiscally Fit.”

If your business uses a fiscal tax year rather than the calendar tax year, you may have additional time to take advantage of the extended $500,000 Section 179 deduction privilege. For example, if your outfit’s next fiscal tax year will begin on November 1, 2011; the $500,000 deduction deal is available for your current tax year. Plus you’ll get another $500,000 allowance for the following tax year that begins next November 1 and ends on October 31, 2011.

If your business uses the calendar year for tax purposes, you only have until December 31, 2011 to take advantage of the generous $500,000 allowance. Don’t wait to see if the rules for 2012 will change to provide the same opportunity! Act now and take advantage of all the benefits available through this current legislative windfall!

Keith Drayer is Vice President of Henry Schein Financial Services. Henry Schein Financial Services provides equipment, technology, and practice start-up and acquisition financing services nationwide. Henry Schein Financial Services can be reached at 800-853-9493
or hsfs@henryschein.com. Please consult your tax advisor regarding your individual circumstances.