Obama Stimulus Plan Extends Tax Benefit for Equipment Purchases
A provision buried within the Obama Administration’s nearly $800 billion stimulus package will extend a piece of the earlier Bush 
Administration plan designed to aid small businesses that purchase new equipment including office furniture, business telephone systems, computer hardware and software, security systems, and refrigeration to name a few examples.
The 2009 American Recovery and Reinvestment Act (ARRA) has extended for one year Section 179 of the 2008 Economic Stimulus Act which allows business to 100% depreciate the cost of their equipment purchase in the first year for purchases up to $250,000. The ARRA also allows for 50% bonus depreciation on all purchases from $250,000 up to $800,000.
Under the ARRA, the equipment must be new and must be purchased and placed in service in 2009.
Finance experts have applauded the provision saying that historically Section 179 has led to increased sales among equipment manufacturers, distributors, and dealers as customer reaped the benefits of the new tax deduction.
How This Works…
You don’t have to have a degree in accounting to sell these stimulus benefits! The main points to remember are:
* Up to $250,000 of new equipment purchases can be 100% written off.
* The average savings for your customer ends up being about 35% of the invoice total.
Call us for the rest of the questions! 770.441.9999
But let’s say you really want to know…..Here’s an example of how a $300,000 purchase breaks down…
Cost of Equipment Purchase: $ 300,000.00
Section 179 Write-Off Amount: $ 250,000.00
50% Bonus Depreciation: $ 25,000.00
Regular 1st Yr Depreciation: $ 5,000.00
Total First Year Deduction: $ 280,000.00
Cash Savings on Purchase: $ 98,000.00
(Assuming a 35% Tax Bracket)
Lowered Cost of Equipment: $ 202,000.00
* The first $250,000 is fully depreciated in 2009.
* The remaining $50,000 is 50% depreciated.
* The remaining $25,000 left over is depreciated on a normal MACRS schedule with first year depreciation being 20% ($5,000).
* This provides the firm a total deduction of $280,000 of the $300,000 purchase.
* Assuming a 35% tax bracket, they would realize tax savings of $98,000 when they file their 2009 return. If their tax bracket is higher or lower, the tax savings would adjust proportionally.
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