American Machinist

Get the tax savings while it lasts.(Government Matters)

THE NEW INVESTMENT provisions of the recently enacted jobs and economic-growth tax cut provide a considerable incentive for replacing overage and/or worn-out equipment on your shop floor.

By ordering new equipment and having it installed by December 31, 2004, a company can deduct 50% of the equipment's cost in the first year. In addition, the company also gets to deduct the normal depreciation amount (14% for most metalworking firms, which fall into the seven-year depreciation class; and 20% for companies that fall into the five-year depreciation class) on the remaining balance. This equates to a deduction of 57% to 60% of the new equipment's cost in the first year--a 20% to 21% tax savings. …

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