The Protection Bureau strives to continue to earn your business by bringing value such as this to our clients, and our future clients.

On Feb. 17, 2009 President Obama signed the new Economic Stimulus Act (ESA). The ESA temporarily reinstated the depreciation bonus and increases Sec. 179 expensing limits. This can mean potentially big tax savings for you when you purchase or lease a security system and install it in 2009.

How does the depreciation bonus work?
Companies that buy new security equipment in 2009 can depreciate 50 percent of the cost in the first year, plus a percentage of the remaining basis in the equipment that would ordinarily be depreciable under the Modified Accelerated Cost Recovery System (MACRS). EXAMPLE: For a $100,000 piece of equipment & Installation with a five-year MACRS life, the first year depreciation under the ESA would be $60,000: $50,000 depreciation bonus, plus 20 percent of the remaining $50,000 in basis. If your tax bracket is 35% that would mean a cash savings of $21,000 because the federal government will reduce your taxes by that much for systems purchased in 2009!

Here are the facts relating to Security & Fire system installations:

1) Will Security Equipment (with installation) be considered equipment under the Depreciation Bonus Rules?
ANSWER: Yes- 7 year property. Security equipment is not specifically mentioned as an asset class in IRS Pub 946. However, if installation is included in the capitalized cost of the equipment, then that would be included in the cost eligible for the 50% Depreciation Bonus plus 20% on the balance.

2) Does the program end Dec 31st or is it available after 2009?
ANSWER: The Depreciation Bonus is only eligible on assets placed in service during calendar 2009 (1/1/09 – 12/31/2009).

3) If The Protection Bureau is in the middle of the installation at year end, is there any way that we can help our clients keep the Depreciation Bonus – ie. Billing, timing of payment, etc?
Answer: NO. Eligible property needs to be placed in service by 12/31/2009. Even if the security equipment was purchased in 2009, it really can’t be placed in service until it is installed. That is why we urge you to finalize an installation agreement with The Protection Bureau as soon as possible – to get in under the deadline.

Thank you for your business,

The Protection Bureau
Your Professional Security Advisors

This information was developed for you as a public service to security equipment buyers. It should not be construed as tax advice or as a promise of potential tax savings or reduced tax liability. For more information about the Depreciation Bonus, contact your tax professional.