by Bob Creamer (originally published 11/14/07; revised 10/24/08)

Internal Revenue Code Section 179 has been referred to as “A Dentist’s Best Friend” and “A Treatment Plan for the Dental Office.” Whatever you call it, this section of the IRS code is most favorable to the dental office.

Section 179 provides an accelerated business deduction for the cost of equipment or furnishings, which the dentist can use to offset practice income. While meant to spur the economy through increased manufacturing and implementation of new technology, the Section 179 deduction can also be taken on used equipment or furnishings as long as the items are new to you. Qualified purchases can be immediately expensed regardless of their standard depreciation lives, which are five years for dental equipment and seven years for office furniture.

The amount of Section 179 you may deduct in 2008 is $250,000. For most dental offices, unless a major remodel or whole new office is contemplated, $250,000 is enough to cover most equipment purchases. However, once qualified equipment purchases exceed $800,000 in a year, there is a dollar-for-dollar reduction of the Section 179 deduction available. Therefore, when annual purchases get to $1,050,000, there is no Section 179 deduction allowed and all purchases revert back to the standard depreciation deductible lives.

The requirements for taking the Section 179 deduction are user-friendly. If you have an existing dental office, newly acquired equipment will qualify for Section 179 as long as it is successfully installed and capable of being used by year-end. If the equipment is going into a new dental office, the deduction cannot be taken until you have successfully met local government requirements to allow patients to be treated in the dental office (frequently called an Occupancy Permit). The Section 179 deduction is fully allowed even if the equipment is 100-percent financed.

Why did Congress allow such a large deduction? Technology is a major if not the most significant ingredient in the success of many small businesses. By allowing the deduction up front, Congress is encouraging small businesses to bring new technology into the office today. You can use Section 179 to immediately put new technology to work, creating efficiencies and more profit. Your additional profits can be used to help make future payments on financed equipment. 

I encourage my clients to use Section 179 as a vehicle for success within their dental offices. The size of the deduction allows an unprecedented opportunity to upgrade, modernize, and invest in their practice. The deduction allows the dentist to plan each year’s purchases a year or more in advance without having to save the cost of the item prior to its acquisition. Dentists can now plan on making their equipment purchases early in the year, allowing the dental office a full year of increased profits through its use. The increased profits typically pay for the financed purchase, while the technology improves the level of care provided to the patient.

Too often dentists wait until late in the year to start thinking about whether or not equipment or office improvements are needed. By the time a final decision is made, it may be too late to get the desired items delivered and fully installed prior to year-end. As a consequence, not only has a year’s increased profits been lost, but tax benefits for the year are lost as well. By failing to have a proper equipment purchase plan for the office, the dentist ends up paying unnecessary taxes. 

After December 31, 2010, Section 179 will be reduced all the way down to just $25,000. With just a little over two years of large deductions available, NOW is the time to get your “DENTAL OFFICE TREATMENT PLAN” in place. With proper planning, you can take full advantage of the $250,000 Section 179 deduction for this year and $128,000, or amount yet to be determined by congress, for each of the next two years. There is also a bonus depreciation available for purchases over $250,000 for 2008 only.

Section 179 is a valuable formula for modernizing your office, creating efficiencies, increasing profits, and providing a great working environment for the patient, doctor and staff. It can truly be a great friend to the dental office. Contact your equipment supplier and start your plan today!

Bob Creamer

Bob Creamer, CPA, is President of the accounting firm Creamer & Associates, PC. For the past 31 years, his firm has emphasized financial and retirement planning, dental transitions, practice enhancement, wealth creation, tax savings and related accounting and consulting services for maintaining an efficient and profitable dental practice. He is also a member of the financial advising and investment company Salem Asset Management, LLC, and a founding member of the Academy of Dental CPA’s (www.adcpa.org).

Bob can be reached at: 800-248-1120 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .