New Dentist Has Questions about Section 179

I am planning to start my first Dental Office this year. Everyone tells me it’s especially best to start this year, 2011, because of additional advantages due to the changes in the 179 Tax law.

I have tried reading up on it and honestly the verbiage is a little too confusing.

Can you "please " just break into simple words for simple folk like me.

I read somewhere that how much you can deduct also depends on how much you make this year.

So, if I open my Office in November / December and my income isn’t that great, is it still going to be beneficial?

Any help is appreciated.

It's painful to have a client come to us a year or two after they started to see that they took too much 179 in their initial years either wasting other deductions, or not being able to use them due to the entity they selected or wasting them at lower brackets like 10-15-25% when they would have been more valuable at 25-28-31-33+ in future years or ALL of the above.

If I start my practice in November / December, my income from the new practice is not going to be much.

Not only will your income not be much, you'll have the ability to absorb a bunch of losses IF it makes sense in your case.

If I am an independent contractor and have my checks towards the entity I create, can that be accounted towards my income for the year?

Yes it can; however, is that a wise decision? Probably not. You can achieve the same "tax" benefits with the proper structuring of your new entity.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com

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Can I Take The Section 179 Personally?

I am buying about $200,000 worth of equipment. Can I take the benefit on my personal taxes and derive more of the benefit that I could otherwise through my corporation.

Maybe, however, why not keep it simple, take the deduction at the corporate level and reduce your w-2, therefore getting the benefit on the personal return. I guess I’m not seeing why you'd want to jump through more hoops to arrive at the same bottom line?

If you need to borrow money from the corporation to supplement your income, do that. Just make sure you document everything and seek advice from your CPA and\or attorney.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest