MARCH 2008

Investments in new equipment supported by Bush’s Economic Stimulus package

Signed into law by President George W. Bush last month, the Economic Stimulus Act of 2008 has two key provisions that should help spur sales by capital equipment manufacturers and offers­ increased depreciation allowances to recycling and waste firms that purchase new equipment this year.

The provisions are Sections 102 and 103. Congress.org describes the sections as follows:

•(Sec. 102) Increases in 2008: (1) the expensing allowance for depreciable business assets to $250,000 [Section 179 Equipment Expense]; and (2) the maximum investment phase-out threshold for such expensing allowance to $800,000.

•(Sec. 103) Increases to 50% (from 30%) the amount of the adjusted basis of certain depreciable property (e.g., equipment and computer software) that may be claimed as a deductible expense in 2008.

Jeff Griffis, vice president of DADE Capital Corp., said companies that purchase equipment in 2008 can expect to enjoy substantial savings via these provisions.

“The customer can write off $425,000 of their $600,000 purchase the first year,” he said. “There are details of the program that have yet to be announced - for example, you can’t expense the $250,000 if you purchase over $800,000 worth of equipment. This is just a guideline. Purchasers of equipment should consult with their accountants.

“Again, leased items do not qualify because a lease is a rental,” he adds. “Equipment must be financed or purchased outright to qualify for these provisions.”

Damon Dedo, sales director for Granutech-Saturn Systems, based in Grand Prairie, Texas, is pleased with the stimulus package.

“Any time there are tax incentives, it’s a plus,” he said. “These guys are going to spend money because they know for every dollar spent, that it is going to cost them a lot less. We were selling equipment before this benefit package came along and now it allows us to push our customers along, especially if they know this a finite offering by the federal government.”

When purchasing equipment, many factors are considered before a final decision is taken.

“Clients should be planning for equipment purchases now so they can benefit from the tax incentives. It would appear that many or all of our clients will have an opportunity to gain from this new tax rule. This is great for people that are prepared and have been holding back on capital equipment purchases,” said Dedo.