Christmas may be over, but there is one group of buyers frantically shopping with a ridiculously tight deadline looming.
That would be businesses seeking to purchase equipment by Wednesday in order to take advantage of a significant tax break — a savings they only learned about Dec. 16, when Congress passed and President Barack Obama signed a $1.1 trillion “cromnibus” spending bill.
There are certain things taxpayers can do in the final days of a year to benefit their tax status. Making charitable contributions, deferring a year-end bonus, contributing to a 401(k) or paying a 2015 college bill early are just some of the many tips experts consistently cite as annual examples for getting ahead.
All those moves can be foreseen, but business people are scrambling to take advantage of a tax break they hoped would come to pass, but wasn’t realized until a little more than a week ago,.
Paul Dowen of Whittemore, Dowen & Ricciardelli, LLP, CPAs and business advisors in Schenectady, explained the one-time limit on business equipment write-offs has returned to $500,000 from $25,000 for 2014, as has a 50 percent bonus depreciation (for details on how your business can specifically be affected, go to www.section179.org). The difference in upfront tax savings can be tens of thousands of dollars or more.
Dowen said the tax break, which was in effect in 2013, will serve as an end-of-year stimulus.
“You have two businesses being affected: the one buying it and the one selling it,” Dowen said. “We had anticipated they were going to do something; the problem is they didn’t give you a lot of time to make a decision.”
The tax break, retroactive through 2014, expires at the end of the year, meaning farmers, construction companies and the like have to move quickly on purchases that normally can be months in the making.
Peter Fletcher, a territory manager for Liftech Equipment Co. in Schenectady, planned to take a few days off around the holidays. Instead, he was driving a customer the other day out to a Syracuse branch to look at a telescopic forklift for a farm.
“He was thinking of making the purchase because of (Section) 179” of the tax law, Fletcher said.
The salesman said he has three other potential customers considering purchases for that same reason.
“We are finding a lot of activity in the last few days,” Fletcher said. “It’s busy. It’s definitely hard to focus on the holidays.”
Fletcher had been monitoring Congress for months on the issue.
“Transactions of this size are tough to do,” he said. “It’s a shame you give customers two weeks to make these big purchases. They need to avoid this in the future.”
Jim MacFadden, owner of MacFadden & Sons Inc. in Sharon Springs, said he recently hosted one of the biggest end-of-year equipment auctions he’s had in years, and also just sold two pieces of equipment because of the tax change.
“We sold two over-$100,000 tractors from that,” he said. “It makes a big difference.”
MacFadden thinks about what might have been.
“If the tax break had been put out back in August, we could have had more sales,” he said. “But I’m still glad we got it.”
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