How to Leverage the Economic Stimulus Act of 2008 for Sales
May 16, 2008 – 10:24 am
So what does the Economic Stimulus Act of 2008 mean to those of us selling IT products and services? A lot! By getting a customer to move forward on a large capital investment now utilizing financing they can realize a nice little tax savings. This can be tied right into selling hardware AND software to your customers paid by Microsoft Financing. Check out the examples below:
Why Finance Now?
Increased Section 179 Expensing for businesses: Now up to a maximum of $250,000 in 2008
And!
50% first year bonus depreciation: IRS provision applies to software placed in service before January 1, 2009
- Combine tax savings with a Microsoft Financing Offer: Acquire new software solutions today and improve your IT environment while deferring the cash outlay
- Drive business productivity up!
- Enjoy current year tax savings: Improve current year profitability and cash flow while leveraging the benefits of increased future productivity that results from the deployment of new assets
Example of 50% Bonus Depreciation in Action
- Spend $300K on upgrading software
- Software is treated under tax law as having a 3-year recovery period for depreciation purposes
- Bonus depreciation on $300,000 at 50% is $150,000.00; an additional $50,000 is allowed representing 1/3 the remaining $150,000
- Total tax depreciation for 2008 is $200,000!
- 2008 tax savings is $64,000.00 ($200,000 x 32%) assuming a 32% marginal Federal Income Tax rate
- Without bonus depreciation: A business could only claim depreciation in the first year of $100,000 (1/3 of $300,000)