elliptipar/Tambient Stimulus Advantage

OBAMA STIMULUS INCLUDES TAX DEDUCTION FOR TAMBIENT
April 9, 2009

By Dave Pfund

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009. The bill allows for 50% bonus depreciation for certain types of property placed in service during the current calendar year. This translates to a significant tax deduction for those who purchase qualifying goods. Tambient purchases qualify for the deduction, whereas investments in building mounted lighting systems do not. This can mean big bucks to building owners who purchase Tambient – not only in 2009, but in years to come.

For owners with qualifying expenses (including Tambient purchases) totaling less than $250,000 for 2009, as much as 35% of the cost of Tambient can be offset through a tax deduction at year’s end1. Depreciation for hardwired lighting systems (lay-in troffers, suspended pendants, etc.) in 2009 provides less than 1% cash back.

The big bonus kicks in when Tambient purchases and other qualifying expenses total more than $250,000. Historically, large business investments in “tangible, depreciable personal property” such as portable Tambient luminaires have resulted in first-year tax savings of approximately 5% of the investment costs (Note 1,2). Now, with the bonus depreciation, the avings are quadrupled to 20% for investments greater than $1,050,000 (Note 3).

By reducing corporate taxes, Tambient leaves companies with more cash on hand and better equipped to cope with today’s economic challenges. To take advantage of the provisions of the American Recovery and Reinvestment Act, Tambient products must be ordered, shipped and placed in service on or before December 31, 2009.

It’s also important to note that while the Obama stimulus effectively reduces the initial cost of Tambient, there are many other savings benefits for Tambient purchasers that provide a payback year after year. These include ongoing accelerated depreciation, reduced wiring and installation costs and reduced energy and maintenance costs.

Stay tuned for more.

1 Assumes a corporate tax rate of 35%.
2 Based on 7-year MACRS.
3 Corporate tax situations vary from company to company. Consult your tax advisor for details.