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February 11, 2008
Today, President Bush signed the Economic Stimulus Act of
2008. Among other things, this act increases the allowable Rule 179
deduction for qualifying equipment purchases.
Click here for more
information
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President Bush Signs The Economic Stimulus Act of
2008
On February 11, 2008, President Bush signed the Economic
Stimulus Act of 2008.
Click here to read the President's comments during the
signing ceremony.
Included as part of this Act are certain income tax
incentives designed to stimulate the economy by accelerating the
depreciation of qualifying business equipment purchases.
This includes a modification of Rule 179
when applied to purchases in 2008, as well as a change in
MACRS
depreciation.
The Rule 179 change involves increasing the maximum
investment to $800,000. The first $250,000 can be 100%
expensed and the balance of $550,000 can be depreciated
normally.
The change in MACRS depreciation for federal income tax
purposes allows a business owner to take 50% of the equipment
cost as the first years depreciation and then apply the standard
MACRS depreciation to the balance.
Here's an example:
A business purchases and places in service heavy
construction equipment (5-year property) during 2008 for a total
cost of $400,000. They wantto claim the maximum
depreciation allowed for 2008. Assume half-year MACRS
depreciation is allowed. The combination of the Section 179
deduction, the 50% special depreciation allowance, and regular
MACRS is figured as follows:
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Maximum Section 179 deduction for 2008
only................$250,000 |
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$400,000 minus
$250,000..................................................$150,000
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$150,000 × 50% special depreciation
allowance...............$75,000 |
| $75,000 remaining basis × 20% regular
MACRS..............$15,000 |
The total depreciation allowed equals $340,000 ($250,000 +
$75,000 + $15,000). The remaining basis is recovered in the
following years using regular MACRS.
Certain restrictions apply and you should always consult your
tax advisor but the bottom line is that if your business can
benefit from a new equipment purchase, the government is making
it a very cost effective decision. And programs
from InSource Capital mean you can enjoy the tax benefits today
and pay for the equipment on a deferred basis.
 
Click here to have a representative
call you or feel free to put up the phone and call us at
818-783-7462.
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