Don’t Miss Out On This Capital Expenditures Tax Deduction

According to the website www.section179.org, “for the 2010 tax year, under the current tax code, Section 179 allows businesses that spend less than $530,000 a year on qualified equipment to write-off up to $134,000 in 2010 with no bonus depreciation – then Section 179 is set to completely expire next year in 2011.

However, in his ‘State of the Union’ address on January 27, 2010, Obama called for extending temporary enhancements to Section 179 through the 2010 tax year end.

Administration officials indicate that those enhancements will include expanded limits on Section 179 including 50% bonus depreciation that have been a feature of earlier stimulus measures under both Bush and Obama.”

When enacted in 2008, a company purchasing capital equipment for $400,000 would realize a total cost of $281,000 for the equipment after Section 179’s write-off, bonus depreciation, normal depreciation and first year deduction. This was a $119,000 tax savings. In many cases the Section 179 deduction can also be taken on leased equipment.

Since 2008, the deduction has undergone some changes and the tax effect is not as high as it was the first year. However, 2010 may be the last year to get any benefit from this deduction!

In most cases this deduction requires the purchaser to take delivery of the equipment before the end of the year. Make sure a long lead time on the equipment you need does not prevent you from getting the deduction. Order your machinery early!

Neither I, nor my company, are authorities on taxes. Please consult a tax accountant for professional advice on how this tax incentive can help you purchase the packaging machinery equipment you need now, before this opportunity is gone for good.

The author, Marge Bonura, is the Director of Sales & Marketing for New England Machinery, Inc. (NEM). NEM is a leading manufacturer of bottle unscramblers, cappers, orienters, retorquers, lidders, pluggers, pump sorter/placers, scoop feeders, hopper elevators and much more. The company has been in business since 1974 selling to the food, beverage, pharmaceutical, personal care, chemical, household products, automotive and other industries. For more information on NEM, visit their website at www.neminc.com.