Let's face it - we're all thinking about ways to save money - from eating out less to delaying that major home or auto purchase - belts are tightening everywhere. Your business is no different!.
Opportunity Knocks -Save With the 2009 Tax Incentives
The new and improved Internal Revenue Section 179 is one of the best business tax breaks we've seen in a long while. However, you only have until December 31, 2009 to purchase, install and place qualifying equipment into service. So if you're thinking about purchasing an MDR system to improve operational efficiency, it's time to act. A new system can still be specified, installed, tested and implemented before year's end. But don't delay-the tax benefits drop significantly in 2010. He who hesitates is lost!
These tax incentives began in 2008 and have been considerably increased for 2009. You don't want to miss the opportunity to get an additional depreciation deduction on qualifying equipment investments this year. The allowance is an additional deduction of 50%, in addition to the standard depreciation known as MACRS (Modified Accelerated Cost Recovery System). For commercial taxpayers who have qualifying business equipment (a.k.a.- "the right stuff") may be able to deduct up to $250,000 of the value of the equipment with a cap on the amount of equipment of $800,000.(In 2010, the deduction is reduced to $128,000 on equipment purchases up to $510,000.) So don't wait to reap the benefits of these incentives.
Example: Cost Comparison between a Traditional Accumulation Conveyor and New Motorized Drive Roller Conveyor Systems:
Traditional accumulation conveyors are constantly running, using up valuable energy even when product is not being conveyed. Motorized drive roller (MDR) conveyor rollers have their own internal motors and run only when needed. MDR conveyor sections are modular, both mechanically and electrically. Instead of having a single 100-ft. accumulation conveyor with a big 5HP, 480-v gear motor and its own air feed drop, MDR systems have 10 sections of 10-ft. easily connect. You don't need air piping, and your power source can be as simple as plugging into a standard 120-v household wall receptacle. Additionally, each roller controls a small zone of free-turning rollers. This segment is typically as long as the length of your shipping container so only the necessary rollers are supplied with electricity. The efficient gearbox design also reduces energy because it requires less torque for operation. As a result, rollers can drive more weight using less torque. These numerous energy-saving factors can reduce conveyor system energy use by up to 70%.
Not only could you see a significant reduction in energy consumption by upgrading to an energy efficient conveyor system, you'll also benefit from the hefty tax deductions you can take on capital expenditures through the American Recovery & Reinvestment Act of 2009.
Savings Example: This Year on a New Conveyor System Purchase Totaling $150,000:
DEPRECIATION EXAMPLE:
Equipment Purchase: $150,000
1st Year Depreciation (50%): $75,000
Regular Depreciation (14%) on Remaining Property Basis of $75,000: $10,500
Total 2009 Deduction* on $150,000 equipment purchase: $85,500
Additional Expensing for Small Businesses: Small businesses can also expense the first $250,000 for 2009 tax year on new equipment purchases up to $800,000. The 50% bonus depreciation applies to the remaining property basis.
EXPENSE EXAMPLE:
Equipment Purchase (max. $250,000 exp.) $425,000
1st Year Depreciation (50%) on Remaining Property Basis of $175,000: $87,500
Regular Depreciation (14%) on Remaining 1st Year Basis of $87,500: $12,250
Total 2009 Deduction* on $425,000 equipment purchase: $349,750
*Examples assume 7-year asset depreciation. Consult your financial advisor for specific qualifications.
Check with your tax advisor to determine if you qualify for these types of deductions on capital expenditures. Also, check with a efficiency specialist at Insight Automation to help identify cost saving measures you can take to reduce energy consumption within your manufacturing facility. Call Insight Automation at 859-647-1111 for more information. You may also visit Insight Automation online at http://www.insightautomation.cc
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