After the Year We’ve All Had, Section 179 Deductions will Help Big Time
The success of an event and party rental professional hinges on their equipment. You need party tents, commercial inflatables, and folding tables and chairs you can rely on. And the costs of all of that equipment will add up, too. That’s where Section 179 tax deductions can be a real lifesaver.
IRS Section 179 deductions allow small business owners to write off the full purchase price of equipment purchases all at once, rather than using depreciation. Most equipment and computer software qualifies for section 179, making this an essential tax deduction for rental operators in the United States. The ability to write off equipment purchases and deduct them from gross income is huge.
According to Section179.org, the deduction limit for Section 179 in 2020 is $1,040,000, while the spending cap on equipment purchases is $2,590,000, with 100 percent bonus depreciation. For most event and party rental companies, those limits are well beyond yearly equipment purchasing budgets.
The 2020 Rental Season was All About Adaptation
In 2020, many rental operators found themselves needing to adapt to social distancing guidelines. Companies began renting their equipment to hospitals, restaurants, school districts, and other unconventional new customers. Depending on where your company operates, some of you managed to get back to good old fashioned party rentals, too. But this year, most of us found ourselves treading into uncharted waters.
Many event and party rental companies adapted by purchasing equipment they may not have wanted or needed otherwise. Companies that worked exclusively with commercial inflatables found themselves buying party tents and other equipment this year, and that may not have happened if not for the pandemic.
Most of the companies that made these sorts of purchases will evolve and expand their services. Chances are, those new tents will be put to work as party rentals going forward. So taking the time to understand section 179 and to discuss these vital deductions with your accountant or tax professional can prove vital to all of this new growth.
The team at Tent and Table aren’t tax experts. If you’re looking for opinions on bounce houses or frame tents, giving us a call is a good idea. But for section 179 deductions in 2020, we strongly recommend you sit down with certified tax professionals and let them walk you through everything you need to know. We also recommend visiting the aforementioned section179.org to learn more about these essential deductions.