The end of the year is upon us, and that means you are probably in the midst of year-end planning. When it comes to closing the books on 2014 though, those who own dental practices have found themselves in a particularly tough position. Stalled by a legislative road block, dentists are waiting to learn the fate of vital tax provisions that would allow dental practices to claim deductions on investments made on certain types of equipment and property.
Section 179d Tax Provision
The “Section 179” tax provision, in its current form, allows practices to deduct up to $500,000 for investments in new equipment and property, phasing out for investments that exceed $2 million. According to an action alert issued by the American Dental Association last month, if the lame-duck session of the 113th Congress fails to extend the provision before year-end, the deduction levels would revert back to pre-stimulus levels – $25,000 and $200,000, respectively.
This could be a game changer since nearly every dental practice counts on these deductions to deliver high-quality care. These provisions help provide dental practices with the tools needed to deliver high-quality care to their patients and without them, many practices would be forced to go without important improvements, such as computer-aided design/computer-aided manufacturing (CAD/CAM) machines, the transfer of paper to electronic health records, and other expensive improvements that are made possible due to the higher tax deduction allowance.
However, if Congress fails to extend the provisions before Dec. 31, there is still a chance for relief. The 114th session of Congress could address the expired tax provision retroactively when it convenes in January.
Retroactive action, however, does little for those who are waiting to complete their year-end responsibilities until a decision is reached. However, failure to close the books on 2014 could have other implications.
Contact your trusted financial advisor to find out how you can prepare for the upcoming year with or without extension being made to the Section 179 tax provision. You can also email Bright Dental CPAs if you would like help with your year-end responsibilities or if you would like to learn more about the financial options available to you and your practice in 2015.
In the meantime, if click here if you would like to contact members of congress to inform them about the importance of the Section 179 tax provision extension.
By Alan Hill, CPA (Mentor office)