TAX INFORMATION:
I wanted to send you the latest information about the Economic Stimulus Act just recently signed, the largest tax savings in US. history:
Economic Stimulus Act of 2008:
A $250,000 write-off for Equipment purchased in 2008!
Section 179 Federal Income Tax Deduction: This deduction has been increased as part of the Economic Stimulus Act of 2008 and it allows a company to deduct the first $250,000 of equipment (Section 179 Property) purchased in 2008 from their taxable income. For companies purchasing (or leasing - with a $1.00 buy-out lease) up to $800,000 of equipment in 2008, this deduction is available in full. It then phases out on a dollar-for-dollar basis between $800,000 and $1,050,000 and it is not available for companies purchasing over $1,050,000 of equipment in 2008. However, companies can finance purchases over $800,000 with an operating lease and may still be able to claim this deduction.
50% Bonus Depreciation (expires December 2008)
The Economic Stimulus Act of 2008 also allows for a special 50% bonus depreciation for equipment placed in service for use in your trade or business for the production of income before January 1, 2009. This deduction allows an additional 50% first-year depreciation on the adjusted basis of qualified new equipment.
Standard Depreciation
Additionally, companies can take their standard depreciation deductions on the adjusted basis of qualified equipment. Machine tools and fabricating equipment are typically depreciated over 7 years.
Cost of Equipment:
$500,000
Section 179 Deduction:
$250,000
50% Bonus Depreciation:
$125,000
Regular First Year Depreciation Deduction:
$17,862.50
Total First Year Deduction:
$392,862.50
Cash Savings on your Equipment Purchase:
$37,501.88
(Assuming a 35% Tax Bracket)
Lowered Cost of Equipment after Tax Savings:
$362,498.13 |
