Obviously I’m not an accountant and everyone’s situation is different but the Economic Stimulus Act of 2008 provides significant tax advantages for capital equipment purchased before December 31, 2008. Equipment purchased before this deadline is eligible for up to 50% bonus depreciation, plus standard MACRS deductions that you would normally take.
| 1st Year Depreciation |
Without Bonus |
With Bonus |
| New Equipment cost |
$100,000 |
$100,000 |
| Less: 50% bonus |
n/a |
$50,000 |
| Less: Standard MACRS* |
20,000 |
$10,000 |
| Total First Year Deduction |
$20,000 |
$60,000 |
*5-year depreciation of 20% per year
This may benefit your company in 2008 if perhaps this was an overall good year but you are planning for a slowdown over the next year or two. There is still time to make a purchase and have the equipment by the end of the year if you know there is something your business needs.
Any specific questions on tools, air compressors, shop equipment or anything else you can always ask the pros at Ohio Power Tool but again talk to your accountant to see if this is something that would have tax benefits for your company.
