Mac-Tech :: Professional Metal Fabricating

Mac-Tech has spent over two decades as an industry leader perfecting a process which serves and supports each and every customer, no matter how big or small. For over 24 years our business has evolved from simply selling and servicing equipment, to becoming a valued partner with our customers. Servicing every customer with excellence and focusing on their total satisfaction...

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In general, profitable metal fabricators who file U.S. federal income tax forms and invest up to $1 Million in capital equipment purchases can receive big benefits from this program. The benefit involves accelerated write-off of the equipment in Tax Year 2008. The tax write-offs come from three sources:

1. Section 179 Federal Income Tax Deduction: this allows manufacturers to expense the first $250,000 (almost twice the 2007 limit) of equipment purchased in 2008 from their taxable income. This benefit provides maximum benefit when the total investment is equal to or less than $800,000, and phases out on a dollar-for-dollar basis to $1,050,000. It is not available for use on capital purchases in excess of $1,050,000.

2. 50% Bonus Depreciation: This special write-off is available for new equipment purchases in 2008 only. It allows manufacturers to write-off an additional 50% of their capital investment during the first year.

3. Standard Depreciation: Companies can still take their standard depreciation after taking advantage of the above two programs.

BIG BENEFITS

The substantial benefits of this program can be seen in the following examples:

Example #1 - A custom metal fabricator invests in a $25,000 Piranha Ironworker. The entire amount is deductable during the first year. If that company is a corporation paying federal taxes at a rate of 40%, that means a real tax savings of $10,000 in 2008. The net cost of the ironworker to that metal fabricator is really only $15,000 - a 40% savings on the purchase price of the equipment.

Example #2 - A contract manufacturer invests $300,000 in a large Bertsch Bending Roll. Using Section 179 Federal tax deduction, the first $250,000 is deductable. Of the remaining $50,000, one-half ($25,000) is deductable using the Bonus Deduction. Of the remaining $25,000, the contract manufacturer can take his normal deduction (14.29%) for an additional $3,572. The total first year deduction is $278,572. Using a federal tax rate of 40%, that means a real tax savings of $111,429 in 2008. The net purchase price of the Bertsch bending roll is only $188,571 - a 37% savings.

Example #3 - A manufacturer invests $950,000 in a Whitney 4400 MAX. Under Section 179, the $250,000 depreciation is reduced by the amount over $800,000, so the 2008 tax deduction is only $100,000. The remaining amount, $850,000 is subject to the 50% bonus depreciation, or $425,000. The remaining $425,000 is then subject to 14.29% standard deduction for an additional $60,732. The total first year depreciation is $585,732. Using a federal tax rate of 40%, that means a real tax savings of $234,293 in 2008. The net purchase price of the Whitney 4400 MAX is only $715,707 - a 25% savings.