Stimulus package offers business incentives.

• Author: Sands, John D.
• Position: QUICK STUDY

Does your company need a new copier or computer system update? A forklift or delivery truck? Does that industrial oven need replacement? Well, thanks to the Economic Stimulus Act of 2008, you can now make your purchase this year, compliments of Uncle Sam--as long as you act quickly.

Just as taxpayer pockets have been padded through the economic stimulus package, businesses, too, have been invited to the party stimulating the economy--just by doing business as usual. Simply by moving pending equipment purchases forward into 2008, business owners can take advantage of the plan's bonus depreciation feature.

This tax incentive allows companies to claim an additional 50 percent depreciation benefit on new equipment in its first year; thus, businesses can write off up to half of their 2008 equipment expenditures. Through the acceleration of tax benefits that would normally be available, it becomes a "can't miss" tax advantage opportunity for any business planning capital acquisitions in the 2008 calendar year.

Come One, Come All

It's a misperception that companies must own their equipment outright to qualify for the bonus depreciation. Business owners can take advantage of the incentive through lease arrangements as well, and on a much greater variety of equipment than many would consider.

The package applies to the full gamut of equipment--from very small to very large. Smaller purchases, such as fax machines and copiers, furniture and telecommunication systems, and are every bit as valid as larger investments, like construction equipment, manufacturing machinery and food services outfitting; even corporate aircraft can qualify.

Companies of all sizes can capitalize on the bonus depreciation feature, provided their purchases or leases meet the following four qualifications:

* The equipment must be purchased by Dec. 31, 2008;

* The equipment must not have been purchased before Jan. 1, 2008;

* Delivery of the equipment must take place on or after Jan. 1, 2008, but on or before Dec. 31, 2008. The only exception to this rule involves corporate aircraft, waiting lists for which can be two to four years long; and

* The equipment must have a recovery period of less than 20 years.

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