Bonus Depreciation, Spending and Data Centers – 2012
January 3, 2012
In trying to weed through what transpired over the past couple of weeks on Capitol Hill, we have been very curious about the details of the Bonus Depreciation schedule as we head into the new year and how it might affect capital spending in the data center world.
As of the end of December 24th, 2011, the “Temporary Tax Cut Continuation Act of 2011” was signed into law; However, the language regarding an extension of the 100% bonus depreciation for new assets did not quite make it through the Senate. At least, ……not yet.
Consequently, the bonus depreciation for 2012 is now 50% for qualified assets placed in service after December 31, 2011 and before January 1, 2013. Taxpayers may elect the 50-percent bonus depreciation or the regular depreciation schedule per review of the bill. Unless something changes, for 2013, it appears that no bonus depreciation is available with the exception of certain expensing available for certain capital purchases under section 179 of the tax code.
This all means that it’s not as good as last year, but it’s much better than 12 months from now. So, if you are on the fence, you better start making some decisions to put capital to use before the end of the year, and actually have your data center equipment placed into service.
For more information, please visit: http://tax.cchgroup.com/downloads/files/pdfs/legislation/2011yearend.pdf
Capital purchases, among others, that appear generally acceptable for depreciation include new equipment such as:
· IT Equipment
· Equipment including machines purchased for business use.
· Tangible personal property used in business.
· Business vehicles with a gross vehicle weight in excess of 6,000 lbs.
· Computers and off-the-shelf computer software.
· Property attached to the business building that is not a structural component of the building.
This article was written by Doug Hollidge of Five 9s Digital, LLC which provides data center development, build-to-suits, advisory and site selection services. For more information, please visit www.five9sdigital.com.
This information is not intended to be tax advice or considered comprehensive in any manner for which to make financial decisions and only a summary overview of certain information and dates based upon recent legislation as published.