What you need to know about Section 179

We've all heard about Section 179, but what is it really and how can it help you?

Nov 1st, 2010
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By Kevin Henry, Editor

We've all heard about Section 179, but what is it really and how can it help you? According to the Web site Section179.org, "Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the U.S. Government to encourage businesses to buy equipment and invest in themselves."

With Section 179 scheduled to stop at the end of the calendar year, now is a good time to start thinking about how this opportunity can help you and your customers. As always, please consult a local tax specialist before making any large purchase.

With the upcoming Dec. 31 deadline in mind, I spoke with Bob Frein, a sales representative with Valley Dental Supply in southern California. Valley Dental has been heavily promoting Section 179 to its customers, so I thought it would be interesting to get his opinion on his customers' reactions to this saving opportunity.

Kevin Henry: When you mention Section 179 during an office call, do you find dentists and their team members understand what that is and what it means?

Bob Frein: What I have found is that most dentists have no idea what Section 179 is or how it can benefit them or their practice. Some have heard of it, but don't know much about the ins and outs of it.

KH: What are the main points you emphasize to dentists and their team members about Section 179?

BF: The main point is that it allows them to deduct the full purchase price of qualified equipment purchased or financed during the tax year. In simple terms, if you buy or lease a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE (up to $250,000 in 2010) from their gross income, this year as opposed to depreciating it over a time period, say five to seven years. Qualified equipment in a dental office would include chairs, units, lights, X-ray units, sterilizers, office furniture, computers, and, in some cases, software.

KH: How much "homework" have your reps had to do to be knowledgeable about Section 179?

BF: Section 179 has been around for years and we have talked about it in the past with our clients. It has just been since the Economic Stimulus Act of 2008 that the limits have been raised to $250,000. All of our reps have been given a print out of the main points as found on www.section179.org. Many of us use the website for information, but we always tell our clients to check with their tax specialist to make sure they qualify for the deduction.

KH: What kind of training has been given to your reps about Section 179?

BF: In addition to the print out and website, many of the equipment manufacturers and leasing companies have provided information about Section 179. I have found www.section179.org to be the most useful though.

KH: Do you feel Section 179 has helped your business in terms of equipment sales thus far in 2010?

BF: Here in California, equipment sales have been fairly soft for most of 2010. People are scared and are holding on to their cash and putting off any major purchases. We are starting to see some of our clients starting to think about upgrading their offices or adding a digital X-ray system.

KH: How prominently will Section 179 fit into your promotion plans for the rest of the year?

BF: Our sales team will talk about the benefits of Section 179 to their clients and let them know that this benefit ($250,000) will expire at the end of the year. Although in my opinion, it will be extended at least one more year to try and aid in recovery. We have done a blog post on it and have tweeted about it as well.

Of course, Valley Dental isn't the only dealer pushing Section 179. I recently spoke with John Bettencourt, Patterson Dental's Vice President, Marketing, Equipment and Technical Service, who told me, "Certainly, we want to focus on the tremendous opportunity that exists with Section 179 to help doctors invest in their practice. Throughout the
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year, as our customers partner with Patterson to establish a plan for growing their practice, our representatives are providing valuable information and scenarios on how taking advantage of Section 179 to upgrade their equipment can have a positive impact on their taxes and the practice – and move doctors closer to achieving their professional and personal goals."

Additionally, Henry Schein has put a PDF on its Web site, helping explain the benefits of Section 179 to its customers and providing a worksheet for customers.

Dr. Jim Caskey, a Texas-based orthodontist, has experienced the Section 179 deduction first hand from his purchase of his i-CAT Cone Beam scanner last year.

"Patients know that they have come to a place that has invested a lot of money to give them the best of care," he recalled. "I found out about 179 through discussions with the Henry Schein sales rep, but I also know about the tax laws and have a good relationship with my accountant. He told me that I saved $70,000 last year from the i-CAT purchase in tax savings. That's big. I recommend anybody considering it to jump on it. It's worth it for increasing a practice's efficiency, and they won't regret it."

Dr. Mark Silberg, a Pittsburgh-based periodontist, utilized Section 179 to invest in a GXCB-500.

"Any practitioner who wants to be on the cutting edge of implant dentistry must be capable, knowledgeable, and a good diagnostician. With all of the information that these 3D scans provide, I cannot imagine undertaking many procedures without it," he said. "Besides the benefits to the practitioner, I don't have to inconvenience my patients or subject them to more radiation exposure by sending them out for a scan. In this economy, we do not know what the future will hold. With tax deductions changing so rapidly, we must ‘take the money and run!'"

Editor's Note: Valley Dental Supply is a member of ADC and is headquartered in Burbank, Calif. You can learn more about the company by logging on to www.valleydentalsupply.com, following Valley Dental on Twitter (twitter.com/valleydental), or finding them on Facebook.

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