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Tax Updates
February 13, 2008, while the headlines are focused on rebate checks to individuals, H.R. 5140 – Recovery Rebates and Economic Stimulus for the American People Act of 2008 has tremendous potential to help you buy and sell more equipment!
The Bill has been signed by the President today, as it has passed both the House and Senate. The most dynamic incentives for capital equipment sales are as follows:
1. Section 179 deduction is increased to $250,000!!! This allows an immediate expensing of $250,000 for new or
used capital equipment. This is designed to assist family held companies that acquire less than $800,000 a year
in capital equipment and is in addition to depreciation.
2. 50% Bonus Depreciation. Companies will be entitled to take an additional 50% bonus depreciation on all
equipment acquired in 2008 without limitation. At first reading, this appears to apply to only new equipment
that is “originally placed in service”.
The impact of these two significant deductions should jump start capital spending and equipment sales.
Combined with creative financing from IFS, 2008 should be a great year!
In order to qualify for these new tax benefits, the equipment must be placed into service by the end of 2008. By the fall of 2008, many vendors may not be able to deliver equipment by year end. In order to take advantage of these benefits, the time to act is now!
Disclaimer: IFS is not licensed and does not provide accounting or legal advice. Please contact your accountant and/or legal professional.
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