THE ECONOMIC STIMULUS ACT 2008

American Barcode and RFID (AB&R) is providing the following information for our customers to highlight the significant changes in the Tax Code Section 179, for tax year 2008.

The 2008 Economic Stimulus Act increases the values of the Code Section 179 deduction for equipment purchased during the 2008 tax year.

·   Maximum investment limitation is increased to $800,000

·   Deduction limit is increased to $250,000

·   Special additional first year depreciation allowance of 50% on the remaining amount

In addition to the Standard Depreciation deduction, Internal Revenue Code Section 179 gives incentives to businesses for the investment of qualified equipment by allowing such businesses to deduct additional depreciation of those investments in the first year.

For example, a commercial taxpayer who purchases qualified equipment for business use may now be able to deduct up to $250,000 of the value of the equipment. Such businesses also may be eligible for  50% bonus depreciation, in addition to the standard first-year depreciation deduction on the outstanding amount.

By utilizing Section 179, business owners can lower tax payments, free up cash for additional equipment purchases or other business needs. Contact us today for additional information on The Economic Stimulus Act (ESA) 2008.

2008 Section 179 Equipment Purchase Example for $300,000 

§         First Year Write Off - $250,000

·        Under the new law, $250,000 is the maximum Section 179 write-off in 2008. 

§         Bonus First Year Depreciation - $25,000

·        On remaining value $300k-$250k = $50k x 50%=25k

§         Normal First Year Depreciation - $5,000

·        Depreciation calculated at 5 years, meaning 20% per year. $25k x 20% = 5k

§         Total First Year Deduction - $280,000

·        $250k + $25k + $5k = $280k

§         Your Tax Savings $98,000

·        Assume 35% tax rate. $280k x 35%= $98,000

§         Actual Total Equipment Costs  $202,000

·        $300k less all tax deductions of $98k.

What Are The Types of Equipment Covered?

The types of equipment that qualify for benefits under the Economic Stimulus Act (ESA) of 2008 are section 168 property with a recovery period of 20 years or less, including computer hardware and off-the-shelf computer software. For Example:

What Rules Apply?

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