2007 TAX INCENTIVES

$112,000 deduction for NEW OR USED capital equipment purchases under $450,000

A favorable tax rule regarding expensing and depreciation -- the Expense Election under Section 179 -- is still in effect this year and allows you to deduct $112,000 on purchases of new and used equipment and accessories totaling $450,000 or less. In addition, you can still take advantage of standard depreciation rules, further reducing your tax liability.

How This Could Work for You

The following example illustrates how current tax rules regarding depreciation can benefit those making capital equipment purchases in 2007:

Example:

A company purchases a $150,000 machine from Industrial Plant Equipment. The company purchased no other capital equipment during the tax year, so it may deduct $112,000 under Section 179. The remaining $38,000 is then depreciated under an accelerated method (14.29% in year 1), generating an estimated additional deduction of $5,430. The sum of these two deductions results in a total first-year deduction of $117,430 or 79 percent of the $150,000 investment.

Snapshot View

Cost of Equipment---------------------$150,000.00

Section 179 Expense------------------$112,000.00
Estimated Depreciation on Remainder-$     5,430.00
Total First-year Deduction------------$ 117,430.00

This example presumes that the mid-quarter convention does not apply.   Everyone's tax situation is different and you should always comsult with your tax professional.
Please note that your annual deduction cannot exceed your aggregate net taxable income for 2007.