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Temporary changes to tax code mean your company may be able to write off the full cost of new equipment purchased in 2011 and a larger portion of your used equipment purchases than allowed in the past. According to AED, Associated Equipment Distributors, The Tax Relief, Unemployment Insurance Reauthorization and Jobs Reauthorization and Job Creation Act of 2010 can mean big tax savings for 2011 equipment buyers.
However, time is running out to take advantage of the tax savings plan approved last year. In order to qualify for 100% Bonus Depreciation, new equipment must be purchased and placed into service before December 31, 2011. Equipment placed into service January 1 through December 31, 2012 will be eligible for 50% Bonus Depreciation.
Two types of capital equipment deductions apply – Section 179 and Bonus Depreciation. The most important difference between the deductions is that both new and used equipment qualify for the Section 179 Deduction, while Bonus Depreciation covers only new equipment.
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Bonus Depreciation is useful to very large businesses spending more than $2 million on new capital equipment in 2011. It is also useful for businesses with a net loss in 2011. These businesses qualify to carry-forward the Bonus Depreciation to a future year. When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation unless the business has no taxable profit in 2011. Additionally, total equipment purchases cannot exceed $2 million.
If you’re considering purchasing machine tools before year’s end, you should check out Star SU’s list of stock machines. Our list includes new hobbers, shapers and vertical chuckers that qualify for Bonus Depreciation.
We also have remanufactured, rebuilt and retrofitted hob sharpeners, rotary grinders, boring mills and multi spindle machines that qualify for Section 179 Deductions. For example, a remanufactured Fellows 10-4 CNC gear shaping machine is on the list. It has been fully remanufactured to a new OEM condition and includes a 1 year new machine warranty. With over 8,000 of these machines in the field and at a cost of roughly 65% of a new machine, this proven and reliable shaper is a bargain as well as a good investment.
Features include:
- Fanuc control
- 10” nominal pitch diameter, external and internal
- 19” maximum diameter swing
- 4” maximum face width
- 4 maximum diametral pitch, spur
- 5 maximum diametral pitch, helical
Request a Quote for the Fellows 10-4 shaper
Capital Equipment Tax Savings Calculator
AMTDA, the American Machine Tool Distributors' Association, has a brief tutorial that explains the impact of the 2011 tax incentives on the cost of ownership for new equipment purchases. The tutorial includes a tax savings calculator.
AED, Associated Equipment Distributors, also has an easy to understand, two-page brochure that explains requirements for the varying types of depreciation bonus and Sec. 179 deductions.
The details of these temporary tax provisions can be tricky, and the actual amount your company may be able to deduct will depend on your company’s taxable income, so be sure to talk to your tax professional before finalizing your purchase. You can also visit the Internal Revenue Service Web site at www.irs.gov for more information.
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