Well, the tax extenders were signed into tax law for 2014.  Everyone who wants expanded section 179 depreciation for their business is breathing a sigh of relief.  But not so fast!  It is now January, 2015 and those 2014 extenders have expired again.  If not extended by the end of the year, section 179 depreciation write off reduces back from $500,000 to $25,000.  That could be a big tax increase for many small businesses who purchase assets to grow their businesses.  Are there other tax credits and deductions that would make it profitable to purchase these expensive assets?

There are a couple other items that generate tax savings:

1. Fifty percent bonus depreciation – another acceleration of normal depreciation, it can allow you to expense half  of a purchase of a new asset (but this also expired at the end of 2014 and will have to be renewed.)

2. Research and Experimentation Credit – 20% of certain R & D costs are allowed to be taken as tax credit (but this also expired at the end of 2014 and will have to be renewed.)

However, the most important thing to remember is that tax savings are only one component in figuring overall profitability of purchasing assets for your business.  You need to look at all factors, like comparing rate of return and cash available for the asset purchases.  Having an available source of asset funding can help you get that asset in service faster.  One simple source of funds is a 6 month working capital line of credit through companies like Kabbage.  That may look expensive at 24% annualized, however (because the loan cost is fee-based and not an interest rate) you can pay it off early without penalty and save big. Also, with a short term loan you can get that asset into service or stock inventory sooner.

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