JOLEE

I agree leasing is not the way to go...you could probably own the machines three times over again in one year of payments! its out of hand. Save until you can pay or keep trying to get a loan...leasing can help put you under in my opinion.

tanu01

If you need to lease,your not ready for this. If you want to lease for what they CLAIM to be tax breaks that may be different.
Bob

DWhite6872

I guess I am confused? I adore Tanu01 but...what do your mean if you need to lease your not ready for this?
Our last salon cost 200,00 for the equipment....based on earlier postings should I have paid for this in Cash? I think I am confused with the terms?

tanu01

No thats not what I meant,Your a different story. Your already in this and know what your doing. I'm talking about dreamers thinking : Hey we can lease everything and be rich in a year with only small lease payments.
Bob

DWhite6872

god...I was thinking everyones putting 200k down? I thought I was missing something.

CapitalFunding

Quote:
On 2004-09-21 19:30:00, tanu01 wrote:
If you need to lease,your not ready for this. If you want to lease for what they CLAIM to be tax breaks that may be different.
Bob


"CLAIM" if you have a lease and ARE NOT TAKING advantages of the write offs I would suggest getting a NEW CPA. Here is some additional information that you can take to your CPA if they don't know what's going on:

Equipment Leasing Tax Advantages
As of the 2003 calendar year, the program in I.R.S. Section 179 states that entering into a one dollar buyout option lease (Finance Lease) may deduct up to a total of $100,000 from their calendar year 2003 income. As well, your business need not spend $100,000 this year in order to claim the amount, but instead enter into a lease agreement during this calendar year. Leases smaller than 100,000, of course, are eligible for tax deductions on a dollar-for-dollar basis, providing annual deductions do not exceed your total tax liability.

Fair Market Value Leases - 100% Tax Deductible Payments
The key benefit of the Fair Market Lease is that the lessee has the option to return the equipment once the lease concludes, without any further obligation. The other option, of course, is to purchase the equipment for its fair market value, or continue to lease the equipment from the lessor. Using a FMV lease, the equipment is not recorded as an asset, nor does it become a long-term liability, and instead can be treated as an off balance sheet operating expense. Thus, FMV lease payments are 100% deductible.

Accelerate Depreciation With Leasing
When purchasing equipment either through cash, loan or with a finance lease (one dollar option), cash expenses can be recovered by claiming equipment depreciation according to IRS "useful life" rules. In most cases, you can also claim interest portions as expenses as well. This depreciation may last anywhere from five to seven years in this case.
With a Fair Market Lease, you can expense 100% of your equipment during the lease term you select. As an example, a 36 month FMV equipment allows you to write off the full expense of the item within three years, as opposed to its whole value, which could take five years.

Avoiding AMT Double Taxation
With the US Tax Reform Act of 1986, Congress targeted small and medium size businesses that had claimed depreciation on equipment, thus lowering tax liability. In effect, they ensured that companies who use depreciation to greatly lower tax liabilities are subject to review. This review does enable the IRS to classify some depreciation writeoffs as what is known as "tax preferences", and insist on an additional Alternative Minimum Tax, or AMT. The result is that owning or buying too much equipment can now trigger new taxes!! With equipment leasing, however, payments are for tax reasons the same as a rental fee, and thus do not qualify as tax preferences, and thus are ineligible for AMT.

Please consult your tax professional for more info.[ This Message was edited by: CapitalFunding on 2004-09-22 11:30 ]

DWhite6872

CapitalFunding, Isn't true that this year is that last year to take bonus deprciation? Since we are opening a couple of salons..is there a max you can depreciate in a year? Please send me a Private message with a phone number so I can submitt some of our loans.

tanu01

If I remember right, last year was 100% andthis year 50%
Bob

DWhite6872

I thought we still had this year for some reason...

CapitalFunding

We have this year. I have some programs for established businesses first 6 months at $99/month so you can take advantage THIS year and not really have to start paying until next year! Please let me know if I can answer any more questions for you.

I'm pretty sure you are able to write off up to $100,000 per business but please talk to your tax professional. The tax code is 179.

My contact information is:

Regards,

Kevin L Stout
Capital Funding Group
(Toll Free) 888.468.5822 Ext.216
(Direct) 425.818.1485
(Fax) 425.401.1826
(Email) kevins@leaseapp.com