Section 179: Radiology Equipment Tax Deduction for 2016
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Section 179 offers radiology equipment tax savings for some small businesses.
New radiology equipment and medical printing solutions have the potential to improve an imaging center’s bottom line through increased patient throughput. But did you know that there is also a possible radiology equipment tax deduction through Section 179 for small businesses?
Under tax legislation passed by the federal government to help small businesses purchase capital equipment and spur economic growth, you might be able to write off (i.e. deduct) the entire amount of a purchase at one time (subject to certain limitations), rather than its depreciated value over time.
Under current tax law, this year’s Section 179 deduction allows business owners to write off up to $500,000 on overall property. However this amount is limited if total purchases exceed $2,000,000 during the year.
Additional details can be found at https://www.irs.gov/publications/p946/ch02.html and http://www.section179.org.
To understand the potential radiology equipment tax deductions that might apply under Section 179, refer to the following table:
| Tax Credit | How It Works | Potentially Qualifying Purchases |
| Section 179 Deduction | · Write off up to $500,000 on overall property value of up to $2 million · Purchases must be made and placed in service by December 31, 2017 | · Digital Technology · X-ray systems · In-office CT units · Computed radiography systems · Medical printing solutions · Software · Imaging software · Case management software
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| Bonus Depreciation | · Take a bonus 50% first year depreciation on equipment placed into service by December 31, 2017 (phases out in 2018 and 2019). · This can be used for the cost of qualifying property (to the extent not expensed under §179) | · Can only be used for new equipment—not used equipment or software |
So, how do these deductions work? Let’s say you purchase $150,000 worth of medical imaging technology. Here’s one way the numbers might break down:
| Example Calculation | |
| Equipment Purchases: | $150,000 |
| 2017 Section 179 Deduction Write Off: | $150,000 |
| Tax Savings: ($150,000 * 35% tax rate) | $52,500 |
| Equipment cost after Section 179 : ($150,000 less all tax deductions) | $97,500 |
Remember that tax laws can be complex and subject to change. Accordingly, before making any major purchase decisions, please speak to your business accountant and tax or financial advisor(s). #radiology #section179
Sarah Wake is a Senior Manager with responsibility for domestic and international tax at Carestream Health. She has more than 12 years of tax accounting experience, including more than 8 years in public accounting with PwC.
