We’re well into the third quarter of the calendar year, so it’s time to start talking about your warehouse related Section 179 purchases (including mezzanines and racks).
What? Too early? You say you don’t start thinking about Section 179 until November? Let me put that thought to be in a moment. But first, a quick refresh on Section 179:
Section 179 is the US Tax Code that allows businesses to write off the full purchase price of eligible equipment. As long as the equipment is purchased and put into service before midnight 12/31/2021, it’s eligible to be written off. And the amounts are generous – you can write off up to one million dollars in equipment purchases (see www.Section179.org for more details).
Anyway, the key part to remember is the “purchased and put into service before midnight 12/31/2021”, or more specifically, the “put into service” part. Section 179 makes no adjustments for delivery delays. Even if you buy equipment and pay for it in full, you cannot write it off unless it’s actually installed / used / plugged in and turned on during 2021. Well, you can’t very well do that if your goods are sitting in a container at the dock, or your manufacturer is waiting on one key part before they can finish your order.
This is why waiting on Section 179 purchases is a bad strategy for 2021. While we at Next Level have been able to keep a reliably fast delivery schedule for mezzanines and racking, this is not the case for many manufacturers. Many, many goods have a several months lead time due to COVID-related delays.
To give an example, I know one warehouse is waiting four months for their new forklift. Another is waiting for their pallet jacks. Other companies are waiting on servers, office furniture, and more. Right now, in August, you still have a good amount of time to get your purchases in. But if you wait until November (like many companies have done in the past), you may get shut out.
Food for thought. Almost all warehouse related equipment is Section 179 eligible. Mezzanines, forklifts, racks, conveyors, computers, software… it’s all good. But make sure you can get your purchases delivered and operational.