While many of our customers understand the significant tax breaks available in the 2003 law “Jobs & Growth Tax Relief Reconciliation Act of 2003,” some may not understand the details of Section 179 and Bonus Depreciation sections of that law.  Section 179, which allows a business to expense up to $100,000 of capital expenditures this year, will continue through 2005.  However, the Bonus Depreciation section will end at midnight on December 31, 2004.  Bonus Depreciation allows our customers to reduce their taxable income by an additional fifty percent of the new capital equipment price less any Section 179 expense.  There is no limit to the amount of annual capital purchases to which Bonus Depreciation may be applied.  This tax savings could be substantial.  It is important that our customers understand that to capture the Bonus Depreciation their new machine tool must be “in use” on December 31 of this year.

If any of our customers are thinking of buying a new Mazak in 2004, there is still time.  However they must act quickly.  The U.S. manufacturing recovery has been quicker and stronger than expected and forced extended machine tool deliveries with some models.

We must be aggressive with our customers about potential loss of Bonus Depreciation.  If they lose out on this significant tax break not only will they be angry with themselves, but I’m sure they would probably be upset with us for not being more forceful.  This tax break is a rare gift from our government.