Solution Provider Encourages CIOs, CFOs to Quickly
Discuss Benefits of “Bonus Depreciation” Allowance Before December
31st Expiration
Farmington Hills,
MI, November 22, 2011 – The “Bonus Depreciation” tax
allowance is being heralded by many as a “once in a lifetime”
opportunity to make smart business investments. In an effort to
stimulate the sluggish U.S. economy, Congress is offering
unprecedented tax benefits to encourage IT and other
business-related capital investments by December 31, 2011.
Logicalis, an international provider of integrated information and
communications technology (ICT) solutions and services (http://www.us.logicalis.com/),
is helping generate awareness and is encouraging IT professionals
to understand how this year’s Bonus Depreciation tax benefits allow
their company to write off 100 percent of qualified IT investments
against their 2011 income taxes instead of spreading the tax
deduction over a traditionally longer five-year term.
“The point of the Bonus Depreciation allowance
is to incentivize business leaders to invest now for their future
competitiveness,” says Greg Baker, Logicalis’ CFO.
“Essentially, the government is offering an interest-free cash
advance to help spur even more investment activity, particularly in
the technology arena. On a macro level, the congressional
goal is to create more demand through the supply chain and more
jobs downstream. The tax and resulting cash flow benefits are
quite compelling and it’s something IT pros should talk to finance
colleagues about as the December 31, 2011, deadline
approaches.”
What might this look like in practice?
Imagine a scenario where a company makes a $1
million investment in new IT hardware assets just prior to December
31, 2011, and pays a 35 percent income tax rate. The Bonus
Depreciation allowance lets the company immediately write off 100
percent of this $1 million investment against 2011 taxable income
saving $350,000 in federal tax payments. That money is retained by
the business to help it grow, but this optimal outcome is only
achieved by intelligently leveraging the tax benefit while it
lasts.
Starting in 2012, the Bonus Depreciation
allowance begins phasing out and falls to just 50 percent of the
qualified investment, so time is clearly of the essence on
investment decisions. While Logicalis does not offer tax
advice, it is promoting awareness and suggesting IT pros talk with
their finance colleagues about how this may benefit their
company. The fact is, if a company has a technology
investment under consideration right now, the IRS is offering an
enormous incentive to accelerate that decision.
What do businesses need to
know?
- This Bonus Depreciation tax
benefit originates from the Small Business Jobs & Credit Act
passed in 2010 and starts phasing out in 2012.
- The Bonus Depreciation
allowance offers a 100 percent write off on qualifying new capital
investments during calendar year 2011.
- The tax rules are fairly
straightforward with no limits on the amount of qualifying
investments and with most new IT-related investments
qualifying.
Logicalis is a technology firm, not a tax
advisor. This information is being provided to encourage
discussion between IT professionals and their own CFOs, finance
departments and tax advisors. Logicalis assumes no
responsibility for the application of this or any other tax
allowance to any specific company or organization.
Want to learn more?
Read about the Bonus Depreciation tax
allowance here, starting on page 5: http://www.irs.gov/pub/irs-pdf/i4562.pdf
About Logicalis
Logicalis is an international provider of
integrated information and communications technology (ICT)
solutions and services founded on a superior breadth of knowledge
and expertise in communications & collaboration, data center,
and cloud computing and managed services.
Logicalis Group employs nearly 2,500 people
worldwide, including highly trained service specialists who design,
specify, deploy and manage complex ICT infrastructures to meet the
needs of over 6,000 corporate and public sector customers. To
achieve this, Logicalis maintains strong partnerships with
technology leaders such as Cisco, HP, IBM and Microsoft.
The Logicalis Group has annualized revenues of
over $1 billion, from operations in the UK, US, Germany, South
America and Asia Pacific, and is fast establishing itself as one of
the leading IT and Communications solution integrators,
specializing in the areas of advanced technologies and
services.
The Logicalis Group is a division of Datatec
Limited, listed on the Johannesburg and London AIM Stock Exchanges,
with revenues of approximately $5 billion.
For more information, visit http://www.us.logicalis.com/.