Black Friday for Machine Tools!
11.23.2016
‘Tis the season for taking advantage of Section 179 tax deductions on machine tools, so you might say this time of year is our industry’s version of Black Friday. If you want to take advantage of the benefits of Section 179, timing is everything, because the rules state that you need to have your new equipment installed by December 31, 2016. I’m happy to report that we do have inventory ready for delivery, but you’ll want to get in line now because there are only about 37 days left until this year’s deadline.
How Much Can You Save?
Section 179 provides a 100% deduction up to half a million dollars. So, let’s say you buy a $500,000 machine tool. You could expense that whole machine, and if you’re at a 35% federal corporate tax rate, your tax savings (or net cash flow) will be $175,000. If you purchase a more expensive machine, say $2 million, you can deduct a half million under Section 179, which leaves you with a taxable basis of $1.5 million. You can then take bonus depreciation on that $1.5 million which is 50%. So, between Section 179 and first year bonus depreciation, you can have a very nice deduction on your tax return.
MORE: Use the Section 179 Calculator to estimate your tax savings
The Longer You Wait, the More You’re at Risk
The tax savings can be very significant, and our distributors are well versed on how to help you utilize Section 179. Making year-end shipments is very doable at this point. But even though Okuma has the largest independently-owned distributi on network in the Americas, the number of trucks we have to support shipments is finite, and our number of service installation teams is a set number as well. The bottom line is, the longer you wait, the more you’re at risk you can’t take delivery on time.
We’ll Bring the Coffee and Donuts!
So this “season” is very much like Black Friday, where you want to make sure you get to the store early so you can grab that really great deal. And hey, if people start lining up outside Okuma, even camping to keep their place in line, we’ll bring the coffee and donuts!
Lisa Rummel is CFO, Okuma America Corporation.
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