Success Through IRS Section 179

by Justin Tabone

Justin Tabone, SVP, leads originations for TIAA Bank’s vendor equipment financing team, which specializes in financing solutions for U.S. businesses originated through a select network of manufacturers, dealers, resellers and distributors, and is supported by private label and co-branded programs.

Justin Tabone of EverBank Commercial Finance explains how understanding the nuances of Section 179 can lead to a host of benefits, especially in the Healthcare sector.

According to, the most common question people have about the Section 179 tax law is how much can they save on their taxes through the deduction. For many people, the way the deduction works is still a mystery and they are unsure if their equipment fits the bill. However, proper use of Section 179 could lead to significant savings.

Understanding the nuances of Section 179 is an important first step in taking full advantage of its potential benefits. Businesses are eager to save and the deduction can be a helpful way to secure equipment while still staying within their annual budgets. This is especially true for the healthcare sector where most practices have seen a spike in demand since the Affordable Care Act and the opportunity to upgrade or purchase new equipment could better serve their growing patient base.

Section 179

Section 179 is meant to support businesses and stimulate the economy by providing incentives for equipment purchases through tax breaks. Typically, when a business purchases equipment, it may be able to take a tax write off little by little each year. This means a large expense all at once with only a small write off for that business’s fiscal year. But with Section 179, businesses can write off the entire cost of equipment the year they buy it, giving them the opportunity to offset the cost and get the equipment they need.

This makes for a more well-balanced annual budget with a significant deduction for a large expense. With the section 179 tax deduction for certain equipment and software becoming permanent in December of 2015, it has opened up the door to growth for both borrowers and vendors. In the healthcare sector, it applies to almost any medical asset which opens up a broad range of options.

Lenders as Leaders

Lenders can help vendors and borrowers succeed by properly explaining the benefits this tax deduction provides. For example, for a healthcare practice considering an upgrade on its technology, outlining the costs it can deduct will provide a clear picture of the savings they can expect. A comparison of tax breaks for this year under Section 179 versus a year without it will emphasize why the right time to buy is now.

Lenders can also offer vendors the right tools to showcase how the deduction works. Equipping vendors with ROI calculators and updated IRS information ensures they are delivering information accurately. Tax simplifiers are also a useful tool, however, they should always be paired with the consultation of a professional tax advisor. Vendors should look at lenders as allies who can help seal the deal and properly move deals forward.
Finally, lenders need to ensure that the appropriate loan structure is in place. A dollar buyout equipment finance agreement or loan fits the bill. However, a fair market value lease will not. A knowledgeable lender is key to ensuring the loan is structured properly.

Putting it all Together

As lenders hold relationships with vendors and borrowers, they have great potential to create a win-win situation for all parties. Through a deep understanding of Section 179, the right tools and the right financing structure, they can successfully capitalize on this opportunity. Successful utilization of financing will also enable practices to better equip themselves to manage the increase in patient volume brought on by the access to healthcare through the Affordable Care Act.

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