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Medical Development Company
How Can Your Business Practice Benefit From The Economic Stimulus Act of 2008
H.R. 5140 – A temporary change to the tax code that became
effective February 13, 2008, makes it extremely beneficial for
businesses to
acquire capital equipment - machinery, computers, and other tangible
goods, this year.
New legislation provides the following incentives:
Bonus Depreciation – Businesses investing in qualifying equipment can
deduct an additional 50% of the cost of their asset in 2008
Businesses usually prefer to deduct the cost of equipment in a single
tax year, rather than deducting a small amount over a number of years.
Increased Expensing - Businesses placing less than $800,000 of
equipment into service this year can immediately deduct up to
$250,000, up from $128,000 in years past.
The new tax incentive plan for 2008 increases the threshold for
capital spending from $510,000 to $800,000, which gives businesses a
greater capacity for investment.
Businesses that spend less than $800,000 in 2008 on equipment
or property can now write off up to $250,000 (up from $128,000). The
$250,000 deduction begins to phase out when businesses purchase more
than $800,000 in 2008.
What Does This Mean to You?
Non-tax/capital leases, including $1 Buyout or Purchase Upon
Termination (PUT) leases, give you the benefits of ownership, which
include the ability to take advantage of H.R. 5140 for qualified
equipment.
The actual cost of equipment, when tax savings are taken into consideration, is extremely attractive.
Take a look:
Financed equipment that is put in use in 2008. Under the economic
stimulus act, assuming a 35% tax bracket, net savings on the equipment
would be:
Equipment cost: $350,000
1st Year Write Off: $250,000 ($250,000 is maximum write-off)
2008 50% Bonus Depreciation $50,000
Normal 1st Year MACRS Depreciation: $10,000
($350,000-$250,000 - $50,000 = $50,000 / 5 = $10,000)*
*Depreciation calculated at 5 years
Total 1st Year Tax Deduction: $310,000
($250,000 + $50,000 + $10,000 = $310,000)
Tax Savings Assuming Rate of 35% $108,500
($310,000 x .35 = $108,500)
1st Year Cost of Equipment After Tax Savings $241,500
($350,000 - $108,500)
Please contact your tax advisor to determine the specific impact to
your business. The tax savings examples above are for discussion
purposes only and do not constitute tax or legal advice.
For more information or updates on the tax code, please
visit www.irs.gov or
contact the IRS helpline at: 800-829-4933.