Ready, Set, Spend

The Internal Revenue Service is holding a sale and CIOs are the target customers.
The Internal Revenue Service is holding a sale and CIOs are the target customers.

Since May 2003, the U.S. government has offered tax relief designed to stimulate capital spending. It's called the Jobs and Growth Tax Reconciliation Relief Act of 2003 and, among other things, it allows companies to depreciate 50 percent of the cost of tangible assets—including hardware and software—in the first year of purchase, up from the previous 30 percent.

That part of the legislation has come to be known as the "bonus depreciation," and it is specifically designed to goose IT spending.

The catch? The equipment must be purchased and deployed by January 1, 2005.

If you've never heard of the bonus depreciation, you're not alone.

Obscure changes to the U.S. Tax Code are the purview of CFOs, and some have not shared the good word with their colleagues in IT.

"I had to learn about it myself, and I was lucky that someone was talking about it at a conference," says Lenny Superville, CIO of the North Carolina Office of the State Auditor. Superville says it's very common for CFOs not to communicate information to CIOs that might encourage IT spending, adding, "They are not visionary."

When the act was first passed, financial analysts thought it would create a surge in tech spending throughout 2004. The reality has been far less stimulating.

The good news: The act is retroactive and can be applied to any purchases made between May 5, 2003, and the New Year. The bad news: You've got less than two months to buy the stuff and deploy it. Tick, tick, tick . . .

This article was originally published on 11-01-2004
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