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Frequently Asked Questions:
Software Purchases and Section 179 Deductions

Can this be used for a Dynamics GP software purchase? Yes, a valid use of IRS 179 Deduction is for software. The software that can be deducted is defined as any "Off-the-Shelf" computer software - software that isn't custom designed and is available to the general public. This description applies to Dynamics GP (on-premise) version. This does not apply to Dynamics GP running in the Cloud.

For basic eligibility, the software must meet all of the following general specifications: The software must be financed (only specific type leases or loans qualify), or must be purchased outright by you.

 The software must be used in your business or income-producing activity.
 The software must have a determinable useful life.
 The software must be expected to last more than one year.
 In addition, these three specific stipulations must be met:
 The software must be readily available for purchase by the general public.
 The software must be subject to a non-exclusive license.
 The software must not have been substantially modified.

Again software purchased in the cloud for a monthly fee cannot be deducted, so unlike those companies that sell exclusively in the cloud those reviewing Dynamics GP have a great alternative.

Is this a new deduction? No this deduction has been available for businesses for some time. The limits have significantly increased in 2010 because of HR 5279. This should be a part of your overall tax strategy in 2010 for additional purchases including Dynamics GP.

As always please consult your tax advisor to determine the tax ramifications of acquiring equipment or software for your business.

Can you provide an example of the savings?





I heard financing is another method to take advantage of this deduction? If the numbers look good to you, they can look even better with financing by taking advantage of the deduction but spreading the cost out over 3 years. In fact the first year could be cash neutral or relatively minimal. Now reviewing the last example, if we finance $40,000 we still will obtain the $12,000 credit. However, in this case we are paying $1,235.08 each month. As you can see the total payments in 2011 are almost the same as our deduction. Essentially, Dynamics GP ‘cost’ is just under $3,000.00 in the first year.





Can I finance through Microsoft or ACE? We have partnered with financing firms that can review the options for financing your purchase of Dynamics GP.

Are there any limitations? Yes there are some limits to the amount you can deduct, but the number in 2010 is $500,000 which is typically much larger than many small to medium sized business will purchase in 2010.

Should I double check with my tax advisor? Yes. While we have attempted to explain the regulations and what it may mean for most businesses we are not a tax advisor. Please contact your current tax advisor and review your options with him. You can also find out more on the deduction at www.irs.gov.

For More Information, please contact:

Susan Looby Direct: 404-663-7330 | Fax: 404-420-2096
Mail: slooby@acemicrotech.com
Web: http://www.acemicrotech.com