Now is a great time to buy equipment, says Mitch Klingher, a certified public accountant and partner in Klingher Nadler, Englewood Cliffs, N.J
 
He shared this message in April at the Association of Independent Corrugated Converters’ (AICC) Spring Meeting in Fort Lauderdale, but data from Paperboard Packaging’s 2011 Exclusive Census Report shows that converters may already have gotten the message.
 
Forty-two percent of corrugated and folding carton converters will spend more on equipment this year than they did last year.
 
Klingher touched on the following points as the prime reasons converters should consider making capital investments before the end of 2011:
 
•Interest rates – “From a historical point of view, they’re as low as they’ve ever been,” he says.
 
•Bonus depreciation – For 2011, the bonus depreciation is 100 percent (it drops to 50 percent in 2012). “This is the greatest deal ever, and I think it’s going away,” Klingher says. That means a company buying and placing in service a piece of new equipment in 2011 can write off the full amount of that equipment cost this year, reducing its taxable income by that amount. Also, it’s retroactive from Sept. 9, 2010. Note that the equipment must be new and running by the end of the year, so don’t wait until the fourth quarter to call your equipment supplier, he says.
 
•Section 179 expensing – Under these rules, which can cover used equipment and computer software, companies can write off 100 percent of the first $500,000 of equipment up to $2 million (at which it begins to phase out). For 2012, the benefit is lowered to $120,000 with a $500,000 phase-out level.
 
Another opportunity converters should look into, he says, is the R&D tax credit, which was extended through 2011, although it hasn’t yet been made permanent.