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Economic Stimulus Act of 2008

Special Business Incentives and Tax Advantages

The Economic Stimulus Act of 2008, also called HR 5140, is a new tax act that was signed by the President on February 13, 2008. The act includes benefits for individuals and for businesses. The terms of the act include two temporary incentives designed to stimulate capital equipment purchases: renewing and modifying the 50% bonus depreciation and increasing the IRS Section 179 expensing limits.

To be eligible to claim bonus depreciation, property must be: (1) eligible for the modified accelerated cost recovery system (MACRS) with a depreciation period of 20 years or less; or (2) computer software; or (3) qualified leasehold property. The property generally must be new to the taxpayer, and purchased and placed in service during 2008.

Tax Act - Key Elements

Bonus Depreciation:

  • 50% additional first-year depreciation on MACRS property with recovery period of 20 years or less
  • Remaining basis (the other 50%) depreciated under normal MACRS rules
  • Property must be new, ordered, purchased and placed in service during Calendar year 2008
  • Will expire on December 31, 2008
  • Expiration is extended one year for property with recovery period of 10 years or longer, for transportation equipment (used to transport people or property), and for certain aircraft

Section 179 Expensing:

  • Increases expensing limit to $250,000 for 2008 purchases
  • Phased out dollar-for-dollar when purchases exceed $800k
  • Property may be new or used
  • Expensing levels will drop at after 2008

CapX equipment lease financing solutions can enable you to take full advantage of these tremendous tax advantages. You can receive 100% financing, obtain your new equipment sooner, and still reap the full tax savings this year. This is a powerful combination!

Note: Consult your tax advisor to evaluate your specific situation.

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