Section 179 Expensing
On Monday, February 11, 2008, President Bush signed the Economic Stimulus Act of 2008 which includes depreciation provisions for businesses buying equipment and computer software and placing it into service in 2008. This tax relief provides an incentive for businesses to make investments this year.
Generally a trade or business must recover the cost of property over a predetermined period of years. The depreciation provisions under the Economic Stimulus Act of 2008 allows a trade or business to depreciate an additional 50% of the cost of an asset acquired and placed into service in 2008 in that year with the remaining basis depreciated in accordance with the statutorily prescribed recovery period. The types of property eligible for the bonus depreciation is purchased computer software which is generally defined as any program designed to cause a computer to perform a desired function. As such, the sale of Autodesk software should generally qualify for this incremental tax benefit.
What does this mean to you? In general, you will be able to deduct 67% of the cost of the software purchased in year of purchase (see example below).
This is generally how it works:
Autodesk Inventor Suite 2008 Commercial New SLM (pricing based on U.S.-Direct VAR Pricing Feb1 to April 30th, 2008)
WITHOUT BONUS DEPRECIATION
3 year useful life property (Software) with a cost of $5,295
Year 1 depreciation $5,295 / 3 = 1,765
Year 2 depreciation $5,295 /3 = 1,765
Year 3 depreciation $5,295 /3 = 1,765
Total depreciation $5,295
WITH BONUS DEPRECIATION
3 year useful life property with a cost of $5,295
Year 1 depreciation $5,295 * 50% = $2,647.5 plus
$2,647.5 / 3 = $ 882.5
$3,530
Year 2 depreciation $2,647.5 / 3 = $ 882.5
Year 3 depreciation $2,647.5 / 3 = $ 882.5
Total depreciation $5,295.00
AutoCAD Mechanical 2008 Commercial New – SLM (pricing based on U.S.-Direct VAR Pricing Feb1 to April 30th, 2008)
WITHOUT BONUS DEPRECIATION
3 year useful life property (Software) with a cost of $4,495
Year 1 depreciation $4,495 /3 = 1,498
Year 2 depreciation $4,495 /3 = 1,498
Year 3 depreciation $4,495 /3 = 1,499
Total depreciation $4,495
WITH BONUS DEPRECIATION
3 year useful life property with a cost of $4,495
Year 1 depreciation $4,495 * 50% = $2,247.5 plus
$2,247.5 / 3 = $ 749.16
$3,530
Year 2 depreciation $2,647.5 / 3 = $ 749.17
Year 3 depreciation $2,647.5 / 3 = $ 749.17
Total depreciation $4,495
THESE ARE GENERAL GUIDELINES AND SHOULD NOT BE CONSTRUED AS TAX ADVICE. You should discuss your specific situation with your personal tax advisor.
Section 179 gives companies the flexibility to depreciate technology purchases over a number of years or all within the same year of the purchase. This is a great program to buy new Autodesk software while creating a tax savings for your company. For more information please visit http://www.section179.org/
Applied Technology Group can provide Autodesk software bundled with Implementation options that qualify for Section 179.
For more information about these articles or if you would like pricing on any of the current promotions, please contact jjenkins@appliedtg.com