Equipment purchases and the new law

New depreciation in centives are available for doctors purchasing dental equipment and making leasehold improvements.

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by Charles Blair, DDS

New depreciation in centives are available for doctors purchasing dental equipment and making leasehold improvements.

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Currently, equipment is depreciated over five or seven years. The five-year depreciation is for high-tech equipment used to diagnose or treat dental patients. In addition, the Section 179 $24,000 expense election is available. For leasehold improvements, the depreciation schedule is currently 39 years.

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In an effort to stimulate business in the wake of 9/11, Congress passed a law that was signed March 9, 2002 (P.L. 101-147, 3/9/02), which allows an additional 30 percent "bonus" depreciation the first year. The bonus is effective for leasehold improvements made and for equipment acquired after Sept. 10, 2001, and before Sept. 11, 2004. Code Section 168(k) was revised to reflect these changes.

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The expense election and special five-year depreciation schedule for high-tech equipment remain, as does the 39-year leasehold improvement depreciation schedule.

Congress continues to encourage and underwrite dentists upgrading technology and their facilities, particularly on an annual basis. Let's look at three examples that show how this "bonus" depreciation accelerates the write-off of equipment.

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