Section 179: A Better Way to Plan Year-End Equipment Investments

A large firm can write a check for new equipment without thinking twice. That is exactly why the check is worth thinking about.

Every dollar a firm spends on equipment in December is a dollar that does not flow to partner distributions. Section 179 is one of the levers available this year. For some firms it changes the year-end picture meaningfully. For others it does very little. The difference comes down to your firm's current position, how the equipment is financed, and how you plan to manage that equipment over its life.

That is a conversation worth having before December, not a decision to make in the last week of the year.

What Section 179 does

Section 179 of the IRS tax code lets businesses deduct the full cost of eligible equipment or software purchased or financed during the current tax year. Under standard depreciation, you deduct a fraction of an asset's cost each year until it is written off. Under Section 179, if your business qualifies, you deduct the entire eligible amount in the year the equipment is placed in service.

The cash flow difference is immediate. You capture the benefit now instead of collecting it in pieces over several years.

What this means for partner earnings

Most firms in this market are partnerships, which means equipment decisions land on the year-end income statement and flow through to partners individually. That makes December more than an operations question.

Consider a firm investing $2,000,000 in a technology refresh.

The point of the comparison is cash timing, not a recommendation. Whether the deduction is available at all depends on how the agreement is structured and on your firm's tax position that year.

What equipment qualifies

Most of what a firm buys qualifies: computers, servers, laptops, office furniture and fixtures, certain software platforms, and specialized systems. Used equipment counts, which surprises people.

The deadline is the part to watch. Equipment must be financed and placed in service by December 31 to count for that tax year. Ordering it is not enough. It has to be in use.

Where Section 179 has limits

Section 179 gets talked about as though it applies cleanly to everyone. It does not, and the boundaries are worth knowing before a firm builds a plan around it.

• The deduction cannot exceed your firm's taxable income for the year. Firms that distribute most of their profits can run into this quickly.
• Annual caps and phase-outs apply once total qualifying purchases pass a threshold.
• The equipment has to be placed in service by December 31. Ordering it does not count.
• Eligibility depends on how the agreement is structured, not on what it is called.
• State treatment does not always follow federal treatment.

The deduction is still a useful tool. It just works differently depending on the firm, so your firm's tax advisor is the right person to help you see where yours lands.

How financing structure affects eligibility

Section 179 applies to equipment your business owns, or is treated as owning for tax purposes. So the agreement you sign affects the outcome:

• A $1 buyout lease lets your firm finance the equipment over a set term and take full ownership for a single dollar at the end. Because you are treated as the owner from the start, the equipment is generally eligible for Section 179 while you continue to pay over time.
• A fair market value (FMV) lease is generally treated as a rental, which means Section 179 typically does not apply, though the lease payments are usually deductible as an operating expense. Structure matters here more than the label does. Some agreements carry terms that cause the IRS to treat them as a purchase rather than a true lease, so it is worth having your tax advisor look at the actual document rather than assuming based on what it is called.

A deduction is not the only reason to change how your firm manages equipment. An FMV lease is built for firms that want predictable refresh cycles, clean returns at end of term, and someone else carrying the residual risk. For most firms, that is the healthier way to manage technology over the long run, and it stays the right call whether or not Section 179 is on the table this year. Trading a structure that fits your lifecycle for a one-year deduction is rarely a good exchange.

The 2026 numbers

Under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, the Section 179 limits increased significantly and are now indexed annually for inflation. For the 2026 tax year:

These are the federal figures. What a firm can actually use in a given year is a separate question, and it comes back to the limits above.

Treat year end as a timing signal

Most companies hear "Section 179" and think tax break. In the bigger picture, it is also a prompt, a reminder to evaluate whether your current equipment and payment structure are helping or hindering your goals.

Year end is the natural moment to step back and ask:

• Do we want to reduce taxable income this year, or preserve deductions for next year?
• Are we about to spend cash on equipment that could be financed instead, leaving the distribution pool intact?
• Are there upgrades we have delayed that would improve operations?
• Could restructuring existing leases free up cash before year end?
• Are our current refresh cycles and end-of-term returns working the way we want them to?
• Is there owned equipment we could convert to cash through a sale-leaseback?

Those questions earn their keep whether or not you end up claiming the deduction.

Make Section 179 part of a broader strategy

The deduction delivers more when it is one piece of a plan rather than the plan itself. Firms that pair it with a thoughtful leasing strategy gain:

• Predictable monthly payments that preserve working capital
• Structured timelines for asset refresh and return
• Alignment with 2026 goals before the year begins
• The ability to act now, while vendors, budgets, and schedules are still in play

That last point matters more than it sounds. Year-end capacity is finite. Vendor lead times, internal approvals, and installation windows all compress in December, and "placed in service" is a hard deadline.

How CoreTech can help

Section 179 is available this year. Whether it benefits your firm is a separate question, and the honest answer is that it depends on your firm's current position, how the equipment is financed, and how you plan to manage it after it is installed.

We can help by showing you the options side by side, what each one looks like for your firm over the full term, and how it fits the way you manage equipment. Sometimes that leads to Section 179. Sometimes it confirms that the structure you already have is the right one.

If Section 179 is on your radar this year, reach out while there is still time to act on it. Contact CoreTech Leasing at info@coretechleasing.com to take a more strategic approach to year-end planning.

This article is for general information only and is not tax or legal advice. CoreTech Leasing does not provide tax advice. Please consult your tax advisor regarding your firm's specific situation.

Sources: Rev. Proc. 2025-32 (IRS) · 2026 Section 179 Deduction: Limits, Phase-Outs & Examples