Bonus Depreciation, Spending & Data Centers – 2012

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.

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About Five 9s Digital, LLC

Five 9s Digital is a data center real estate company offering data center development, investment sales, real estate advisory, and colocation and wholesale data center selection and procurement services. Five 9s Digital has been involved in the development and ownership of multiple mission critical facilities from single user build-to-suit facilities to multi-tenant data centers. Five 9s Digital brings a wealth of experience, background and expertise in providing solutions to the data center arena. Due to the specific and yet evolving requirements of mission critical end users in today’s world, Five 9s Digital is able to offer real solutions, real facilities, and real choices due its extensive and up-to-date knowledge base. Five 9s Digital is a Best Data Sites Certification Alliance™ member.
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