Sage Fixed Assets

Good news
for your business

We don’t want you to pay any more in taxes than you have to so Sage Fixed Assets 2016 includes all of the updates to ensure you are getting the most out of the Protecting Americans from Tax Hikes (PATH) Act of 2015.

#NotOneDollarMore

What you need to know

The Protecting Americans from Tax Hikes (PATH) Act of 2015 was passed and signed into law on December 18. This Act makes over 20 tax relief provisions permanent and extends for 2 years or 5 years a number of other tax relief provisions that had expired at the end of 2014.



PATH highlights

  • Section 179 extended and modified
    • The 179 expensing deduction amount and investment limit ($500,000 and $2,000,000, respectively) are reinstated and made permanent as of 2015. These limits are indexed for inflation beginning in 2016.
    • The special rules that allow expensing for computer software and qualified real property are also permanently extended.
    • The $250,000 expensing limitation cap on qualified real property is removed for tax years beginning after 2015. Thus the limit on real property will be the same as personal property.
    • Provision allowing taxpayers to revoke a 179 election without obtaining consent of the Secretary.
    • Air conditioning and heating units placed in service in tax years beginning after 2015 are eligible for expensing.
  • 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvement property is permanently extended.

  • Bonus depreciation extended and modified
    • Bonus depreciation for qualified property is extended 5 years through 2019 (through 2020 for certain property with a longer production period).
    • The bonus percentage is 50% for property placed in service 2015, 2016 and 2017. The percentage drops to 40% in 2018 and 30% in 2019.
    • The act continues to allow taxpayers to elect to accelerate the use of AMT credit in lieu of bonus deprecation.
    • Qualified improvement property is eligible for bonus starting in 2016 (from 2010 through 2015, only qualified leasehold improvement property is eligible).
    • Certain trees, vines and plants bearing fruit and nuts are eligible for bonus when planted or grafted, instead of when placed in service, beginning in 2016.
    • The first-year depreciation cap “bump-up” of $8,000 for ‘luxury’ autos and certain trucks, which do not elect out of bonus, is extended through 2017. The bump up is reduced to $6,400 in 2018 and $4,800 in 2019.
  • Indian Reservation property accelerated depreciation extended and modified
    • The act extends accelerated depreciation for qualified Indian Reservation property 2 years, through 2016.
    • The act allows taxpayers to elect out of the accelerated rules for property placed in service in 2016.
  • Several other provisions were extended such as provisions for empowerment zones, race horses, motorsports complexes, mine safety equipment and many others.

Here's an example

Assume $100,000 of assets were placed in service in 2015 that have a 7-year tax life and which qualify for the 50% bonus—such as machinery or furniture and fixtures.

Without the bonus ($100,000 / 7
years x 200% x ½ year convention)

$14,286
 

With the bonus ($50,000 bonus + ($50,000 / 7 years
x 200% x ½ year convention))

$57,143
 


So a company can deduct $42,857 more on their tax return than before PATH. Multiply $42,857 by the effective tax rate to estimate the cash flow savings.

Make sure you don’t pay one dollar more in taxes than you should. Sage Fixed Assets 2016 has all the required updates built into the already robust depreciation engine. Make sure you are using the right tool to get every dollar back.

Call us today at 800-368-2405.

Retroactively apply the bonus

Review all of your 2015 asset purchases and retroactively apply the 50% Bonus depreciation to all qualified assets, if doing so would maximize your tax situation.

Apply the 179 deduction

Review your current tax situation to determine if it would benefit you to take advantage of the increased Section 179 expensing deduction.

Get it done quickly

For Sage Fixed Assets desktop customers, the “168 Allowance Switch” and the “Tax Expense” report are two features that will help you quickly apply the extended provisions.

Sage Fixed Assets 2016 includes all of these provisions and the ability to apply them. Don’t wait until it’s too late to take advantage of these savings.

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