New stimulus bill will spark new equipment purchases

Source: AED Washington Insights; www.aednet.org, March 2002

President George W. Bush recently signed into law the Job Creation and Worker Assistance Act of 2002. The major significance for equipment distributors is that the new law contains an accelerated depreciation provision designed specifically to spark new equipment purchases.

The depreciation bonus, which will remain in effect for three years, allows purchasers of new equipment to deduct an additional 30 percent of the cost of new equipment for the year the equipment is acquired. The remaining 70 percent will be depreciated according to normal rules.

The tax law also contains a provision that temporarily extends the net operating loss (NOL) carryback period from two years to five. Companies whose deductions exceed gross income for 2001 and 2002 will be allowed to carry the deductions back and re-file taxes for past years.

As the economy begins to recover, the depreciation bonus will add significant incentives to spark new equipment purchases. This increase in sales activity will help improve manufacturing capacity and create jobs.

For more detailed information, click on the link to the Association of Equipment Dealers web page: http://www.aednet.org/government/newsletter/03-18-2002_aed_capitol_quick_notes.htm