Published by AE Tax Advisors Team • 2026-07-22

Equipment Leasing Strategy Generates $100,000 Year 1 Deduction

The Client

Frank Deluca, owner of a commercial printing company in Pittsburgh, Pennsylvania, generated $520,000 in annual net business income. The business needed to upgrade its primary printing press and finishing equipment, a capital investment of approximately $285,000.

The Problem

Frank's tax bill was $142,000 per year, and he needed to invest in equipment to remain competitive. However, he was unsure whether purchasing or leasing would provide better tax treatment, and his prior CPA had not explored accelerated depreciation options for equipment beyond standard MACRS schedules.

Our Strategy

We structured the equipment acquisition using Section 179 immediate expensing, which allows businesses to deduct the full cost of qualifying equipment in the year of purchase (up to $1,220,000 for 2024). The $285,000 in printing equipment qualified for full Section 179 treatment. We also identified $42,000 in existing equipment that had been depreciated using standard schedules when it qualified for bonus depreciation, filing corrections to capture the missed deductions. Total Year 1 equipment deductions: $327,000, of which $100,000 created net new tax savings beyond what normal depreciation would have provided.

The Results

The Section 179 deduction on the new equipment eliminated $100,000 in tax that would have been paid over the standard depreciation period. Frank's Year 1 tax bill dropped from $142,000 to $42,000. The new equipment also increased production capacity by 35%, adding an estimated $120,000 in annual revenue.

Key Takeaway

Business owners making capital equipment purchases should always evaluate Section 179 expensing and bonus depreciation. Front-loading the deduction into Year 1 can reduce the effective cost of equipment by 30-40% compared to standard depreciation schedules.