Exploring Tax Breaks and 4th Quarter Equipment Financing Benefits

As we approach the end of the 4th quarter, the mid-quarter convention is an important topic of discussion for companies managing their equipment purchases.

The mid-quarter convention applies if more than 40% of your total annual equipment purchases are placed in service during the 4th quarter of the tax year. If less than 40% is placed in service during the 4th quarter, companies can use the half-year convention for tax depreciation purposes.  The half-year convention means that a company can take a six-month tax depreciation deduction no matter when an asset is placed into service during the year.  The mid-quarter convention means that a company begins tax depreciation in the middle of the quarter the asset is placed into service, which reduces the tax deduction for assets placed in service during the second half of the year.  So, by acquiring your equipment using a tax lease instead of a straight capital purchase, you can shift the ownership for tax purposes to Altec Capital and it will not count against your percentage limit for the mid-quarter convention. By doing this, you are still able to select the exact assets you need, and retain the rights to purchase or return equipment at the end of the lease.

An added benefit of using a tax lease in the 4th quarter is taking advantage of the best rates of the year from Altec Capital because of the increased tax benefits. Another point to consider is tax break changes that go into effect after December 31, 2017. The bonus depreciation benefit moves from 50% to 40% in 2018, which can positively impact your bottom line if you enter into an equipment lease in the 4th quarter this year.

With multiple leasing options, Altec Capital can assist you with transferring your equipment to lease. To speak with an Altec Capital representative on how you can take advantage of 4^th quarter leasing benefits, call (888) 408-8148.