When the Clock Strikes 179

This article is being written in the aftermath of the tax-season frenzy when accountants and clients scramble to meet the tax deadline, while keeping as much of their hard-earned revenues as possible. However, planning ahead for tax savings should be a year-round endeavor. Those who have invested in new equipment are aware of its advantages—increased case acceptance, productivity and enhancement of loyalty and customer service. This year, Section 179 of the tax code helps to make an equipment purchase even more sensible.IRS Code Section 179 allows dentists to recover a hefty amount of their investment. Ken Rubin, a San Diego-based Dental CPA for the past 26 years (and a dentist’s son), specializes in helping dentists maximize their financial potential. He notes, “As a Dental CPA, I eat, sleep and breathe tax and financial matters for dentists.”



This year, Section 179 offers a high financial incentive. Rubin notes, “You can deduct the first $250,000 worth of equipment (that is put into service by the last day of this year) and even more in conjunction with other depreciation methods, if your purchases exceed $250,000.” This cap makes it easier to invest in new technology, such as the GXCB-500 HD Cone Beam system, and even group multiple technologies, like the 500 HD and intraoral sensors. Rubin notes that the depreciation structure can be tiered, depending upon the investment. “First, up to $250,000 can be written off using Section 179; second, any balance still remaining can be depreciated over a five-year period.”

The impressive Section 179 inducement is scheduled to expire on December 31, 2010. “There has been talk about reducing the accelerated depreciation capabilities for next year,” says Rubin. He cautions dentists to “not let the tax tail wag the dog,” meaning purchases should not be made just for the sake of tax reduction, “but if this equipment can make your practice more profitable, more efficient and add new and innovative procedures, then it makes sense to let Uncle Sam help pay for part of that.”

Rubin also suggests that it makes sense to plan early in the year rather than scrambling in December. He says “CPA year-end tax planning meetings with their clients usuallyresult in a mad rush and a huge December spike in equipment purchases for dentists. Many dentists are faced with a large tax burden in April, and quickly must decide how to mitigate that. Implementing the new equipment sooner in the year can jumpstart an increase in profitability, and the new equipment can also start to be included in practice marketing by spotlighting the practice as one of the few in the area with Cone Beam imaging, for example.”

Pittsburgh-based periodontist, Dr. Mark Silberg utilized Section 179 to invest in a GXCB-500. He says, “Any practitioner who wants to be on the cutting edge of implant dentistry must be capable, knowledgeable and a good diagnostician. With all of the information that these 3D scans provide, I cannot imagine undertaking many procedures without it.” He continues, “Besides the benefits to the practitioner, I don’t have to inconvenience my patients or subject them to more radiation exposure by sending them out for a scan. In this economy, we do not know what the future will hold. With tax deductions changing so rapidly, we must take the money and run!”

Even financially savvy dentists should discuss tax incentives with their CPA or financial advisor to get the maximum value and maximum savings from their purchases. This year’s Section 179 offers the perfect opportunity to bring economic recovery and even profitability to your dental office.

Sally McKenzie is a founder and CEO of McKenzie Management. For over 25 years, Sally has immersed herself in techniques, systems and methods to improve the performance of dental practices. She continues to be a national and international featured speaker on dental practice management. Her articles can be found in every major dental publication. Ms. McKenzie is also an editor and publisher in her own right. Visit her at www.mckenziemgmt.com.