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The Economic Stimulus Package signed into law by President Bush in February provides small business huge tax relief which lowers your cost of purchasing the packaging equipment you require. Unfortunately often it is only the larger corporations that maximize these hand-outs. Smaller businesses lack the time to investigate requirements and procedures to take advantage of the plan. Do not miss out on this opportunity as your equipment purchase must be in use during the 2008 calendar year.
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As Kramer so eloquently put it to Seinfeld:
“It’s a write off
Jerry, they simply write it off”. |
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WIIFW (What's In It For Me):
Small business:
If your company purchases LESS THAN $800,000 of capital assets this year, you can expense the first $250,000 of capital equipment. This means the TOTAL COST of the first $250,000 of packaging equipment your company purchases in 2008 can be 100% deducted in 2008.
All Business:
In 2008, all companies are entitled to a 50% bonus depreciation that applies to all capital equipment that is purchased and put in use during 2008 (not before & not after). The remaining 50% is depreciated normally (stretch wrap equipment is MACRS 7 year property) Thus if a large company (one that purchases more than $800,000 in |
capital investment) purchases a stretch wrapping system for $300,000 the company gets a first year bonus depreciation of $150,000 and the remaining $150,000 would be depreciated over 7 years thus the total first year depreciation would be 50% of $300,000 and 14% of $150,000 for a total first year depreciation of $171,375. Small businesses can actually take advantage of BOTH provisions. Thus the same $300,000 purchase by a small business would get the first $250,000 expense write-off and the 50% bonus depreciation on the remaining $50,000 and then the normal 14% depreciation on the remaining $50,000 for a first year write-off of $278,562.
The Kicker:
You don’t have to have already paid for the equipment. Remember, the requirement is that the equipment be purchased and in use in 2008. It doesn’t say anything about having to pay for it. You can actually arrange a capital lease that will allow you to take advantage of the write-off in 2008 without having paid for the equipment. We can help you with that also by applying for a capital lease. |
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| The Economic Stimulus Package provides business with a rare gift in 2008. Take advantage of it. But remember your equipment must be in operation (not put on order) in 2008. So don’t wait, when it might be too late. The time is now. |
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| If you are looking for more information concerning the Economic stimulus package and how it affects your packaging purchases, please do not hesitate to contact us. We would be glad to help you through it. |
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