American Jobs Creation Act of 2004
2008 Tax Law
The savings may significantly decrease your tax liability.
Here’s how it works*….
ü Section 179 of the Tax Code now allows companies with $800,000 or less in capital expenditures to take a $250,000 tax deduction annually for depreciation. This applies to new equipment placed in service in 2008 (used equipment does not qualify)
ü Most all woodworking equipment is considered Seven Year Property (7 year useful life) and is written off using straight line depreciation.
ü All lease products offered by E-Z Lease may qualify under these guidelines.
*Companies should always seek the advise of their accountant to ensure that they are properly reporting their taxes.
For more information click here
Example ….
Let’s assume that you purchase a $300,000 machine. The machine purchased has a useful life of 7 years and your business is in the 34% tax bracket.
2007 Tax Law 2008 Benefit
Purchase Price of New Equipment $300,000 $300,000
Section 179 Allowance - $125,000 -$250,000
Adjusted Cost of Equipment After Section 179 =$75,000 =$50,000
2008 Tax Act allows an additional 50% Bonus
Depreciation (50,000 x 0.5) -$0 -$25,000
Total adjusted cost of equip. bonus depriciation =$175,000 =$25,000
7 Year Straight Line Depreciation
(Total Adjusted Cost / 7 Yrs) =$25,000 =$3,571
Section 179 Allowance +$125,000 +$250,000
Additional Stimulus Allowance +$0 +$25,000
Total Year One Depreciation Amount =$150,000 =$278,571
Tax Savings During First Year =$51,000 =$94,714
(Depr. Amount x .34 Tax Rate)
First Year Tax Savings due to the 2008 tax cut is $94,714!!!!!
Coupled with today’s low interest rates the total tax write-off is worth almost 8 monthly lease payments!
