Sgt911, I am not an accountant nor an accountant's son, but I can give you what little i know from the IRs publication for tax law changes for 2008, as well as some other websites you can look up yourself. I was turned on to it first by my local tractor dealer. I checked into it myself and the point is that it may help explain why some prices on used equipment may be dropping a little more than usual.
Basically, you know that a business can either "depreciate" equipment over a number of years, or sometimes just take a deduction in one year for the entire value of the equipment against their income. That would be called "expensing." There was a limit though. The new Economic Stimulus Act for 2008 basically doubles that limit to 250,000, allowing you to "expense" the entire amount up that level for 2008. Plus if you go over the limit, you also have a chance at a 50% "depreciation" for 2008. Sort of a double whammy for those evil rich guys who really like to play with toys.
I probably muddied it all up, but here is an example: If you bought a new tractor for your business for $25,000, assuming a 35% tax bracket, the effective cost of the new tractor is $16,250. So you can see why a used tractor price would have to adjust this year to reflect that difference. In other words, why would I buy your used one for 15K if I could buy a new one for 16K?
Now an interesting thing to me is that some accountants claim that this change does NOT only apply to new equipment, but also can be taken against used equipment if it is bought in 2008. I would want to double check that.
Anyway, you have to buy the equipment in 08 for it to qualify. Surely there is a CPA among us who can explain this a lot better than I did.
Disclaimer: pondsea is not giving financial, legal, tax, accounting or any other kind of advice that, in any event of being proven incorrect, confusing, or downright wrong, could bring adverse action of any kind, including berating, belittling, suing, or threats of any nature. He reserves the right to change his mind upon being proven wrong and claim that the new position was his actual position all along, making him incapable of taking any other position than the correct one anyway. All persons reading this are encouraged to seek the counsel of a professional on these matters, so that, at least someone can make money giving you the same help.
