Tax Deductions on IT Purchases

You Can Receive Major Tax Deductions on IT Purchases With the Economic Stimulus Act of 2008

Earlier this year, President Bush signed the Economic Stimulus Act of 2008 (H.R. 5140), a bill providing temporary tax incentives for businesses to make investments in their companies and fuel economic growth.

So what does this mean to you and your business? • Midsize companies already planning investments for this year will realize better cash flow. • The tax advantages on capital expenditures made during 2008 can mean significant deductions, and therefore tax savings, just by moving up purchases you were planning for 2009. • The legislation increases expensing for small businesses. A business placing less than $800,000 of equipment into service this year would be able to immediately deduct up to $250,000 - up from $128,000 of its investment under prior law. • With the new bonus depreciation provision, companies can deduct 50% of the adjusted basis of qualifying property. The remaining cost basis can be deducted over the recovery period.

“The changes to the expensing provisions are very generous and the new bonus depreciation is substantial” said Henry A. Grandizio, CPA/MS, Grandizio, Wilkins, Little & Matthews LLP. “If an organization invests $150,000 in new equipment during 2008, they could realize an immediate tax deduction of $150,000. Of course, each company should consult with their own tax advisor to determine the effect the new tax laws will have on their specific situation”

President Bush called the new law a “booster shot” for the economy, and stated the bill is large enough to have an impact amounting to more than $152 billion this year, or about 1 percent of GDP.

The legislation is expected to save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code, allowing American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. Since buying equipment, software and tangible property this year will dramatically lower taxes, businesses will be encouraged to expand and make greater investments.

Sklar Technology Partners can help you take advantage of this bill by pushing forward the technology solutions you plan to implement. Please contact me to help with your IT plans. I am also happy to provide you with a detailed copy of the H.R. 5140 explaining this incentive or you can download it from the link below.

(http://www.sklartechnology.com/pdf/HR5140.pdf)

p: 804.730.2628 / randy@sklartech.com

 

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