Tax Tips for Our Clients

This year, small and mid-size businesses have the opportunity to deduct up to 20X more in computers and software purchased using a much larger section 179 tax deduction for 2016.

If you have been putting off a substantial computer systems upgrade, 2016 is an excellent year to move forward. Yes, this is the year to begin enjoying the full benefits of modern technology. Because, the break you have been waiting for is here in the form of a greatly expanded Section 179 tax deduction.

The "Protecting Americans from Tax Hikes Act of 2015" (PATH Act) became law on December, 18, 2015. The bill increased the Section 179 deduction limit from $25,000 to $500,000 a 20-fold increase. Although the boost to $500,000 was made retroactive to 2015, it came too late in the year to plan major technology purchases.


Bonus Depreciation, unavailable last year, has been reinstated for 2016. Bonus Depreciation is taken after the Section 179 Spending Cap is reached. The 50% Bonus Depreciation will be extended through 2019 but will phase down to 40 percent in 2018 and 30 percent in 2019.

Increase the Bottom Line 

The greatly enlarged 2016 Section 179 deduction is great news for business. But, it gets better. Many business owners find that, if they lease or finance their Section 179 qualified equipment, the tax savings actually exceed the first year's payments on the equipment. This makes buying equipment profitable for the current tax year. This is entirely legal. And, it's a good example of the incentive that Section 179 provides small and mid-size businesses.

Excellent Timing

Almost every sized business uses software to run their business. Many have delayed upgrading their aging systems or making improvements to permit their users to do more and streamline operations. They retreat from the investment or debt required to implement modern technology across the entire business. They may have taken a piecemeal approach to upgrades, resulting in productivity, compatibility and security problems, and administrative challenges.

Fortunately, Section 179 of the tax code lets businesses write off the entire cost of computer equipment and off-the-shelf software purchased and put in use before December 31, 2016. And, the increased deduction limit of $500,000 allows businesses to conserve cash on qualifying major technology outlays. Thus, taking the deduction can reduce the net cost by one third or more.

Micro Force is currently serving clients with:

  • Dynamics Great Plains Support

  • Dynamics 365 Business Central

  • Dynamics 365

  • Dynamics GP Support

  • Great Plains Support

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