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Lesson · Business · tax

Buy the equipment. Deduct it this year.

Section 179 and bonus depreciation let a business expense equipment immediately instead of over years — a large, same-year deduction against your income.

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$626,000
Approximate 2025 excess business loss cap, married filing jointly

Key points

Four entities, four jobs

✓
Main S corp: operations
✓
Second S corp: side business
✓
Property management LLC
✓
Family management LLC
✓
Leasing company LLC

How it works

Build the leasing entity

1
Form a separate LLCIts only job is owning gear
2
Title the equipment to itTrucks, trailers, tools, machines
3
Sign a written leaseFair market rent, paid monthly

WORKED EXAMPLE

One truck, two structures

$80,000 truck$80,000 truck
Rent deduction: $0Rent deduction: $19,200
Depreciation in op coDepreciation in lease co
Asset sits in the riskAsset sits outside

HOW IT GETS DEDUCTED

Two ways to write it off

Capped each yearNo dollar cap
Cannot create a lossCan create a loss
Extra lessor limitsFewer lessor limits

Key points

What makes the lease real

✓
Written lease agreement
✓
Fair market rent
✓
Separate bank account
✓
Title and insurance match
✓
Rent paid every month
✓
Lease co files its own return

How it works

Where the extra loss goes

1
Excess is disallowedAnything above the annual cap
2
It becomes an NOLCarries forward indefinitely
3
Used in a future yearOffsets up to 80% of income

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The Equipment Leasing field guide — one page

The strategy, the checklist, the key numbers, and links to the actual tax code. Print it, take it to your CPA. Free, no strings.

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Field guide · PDF

Equipment Leasing

Cliff notes + checklist + the law

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The law behind it

Primary sources

Verify against the source before you rely on it. This is education, not legal or tax advice.

26 U.S.C. Sec. 179 — Election to expense certain depreciable business assets in the year placed in service.law.cornell.edu/uscode/text/26/179
26 U.S.C. Sec. 168(k) — Bonus depreciation — an additional first-year deduction for qualified property.law.cornell.edu/uscode/text/26/168
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