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IBM Takes Cue from Economic Stimulus Package, Passes Benefits on to Customers

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IBM Global Financing (IGF), the technology lending and leasing business segment of IBM, has announced that it will pass along some of the benefits IBM receives under the new US economic stimulus package, signed into law Wednesday by the President, to U.S. businesses looking to access technology equipment in 2008.

Under the new Economic Stimulus Advantage Offering developed by IBM, clients will benefit from new low rate and no charge deferral offerings on the acquisition of technology equipment needed to maintain their business competitiveness and achieve new business innovation. Clients can receive either enhanced rates or a free three-month deferral on leases of IBM and non-IBM equipment installed by 2008. In leasing arrangements, the lessor traditionally holds title to the equipment and therefore largely reaps the benefits afforded under this law.

"IBM wants to be sure that our clients have the funding they need to support business innovation and growth in these uncertain times," said John Callies, general manager of IGF. "The new law gives IBM an opportunity to pass through further bonus savings to our customers looking to access new technology to deliver on their business objectives."

Wednesday, President Bush signed into law the U.S. Economic Stimulus Package. In addition to the tax benefits for individuals, the law will have an extremely favorable impact for businesses challenged to fund their strategic technology business investments in an uncertain economy. The new law includes a bonus depreciation provision available for all businesses on new equipment and software placed in service in 2008. Large and small businesses can expense up to 50 percent of the value of capital goods placed into service this year, while certain small businesses may have the ability to nearly double the amount they immediately write-off during 2008.

The President's approval of the economic stimulus bill also represents an opportunity for U.S. customers to take advantage of IBM's Asset Recovery Solutions. Under this program, IBM can manage the buyback and disposal of excess or existing technology, replacing it with new technology in order to potentially benefit from the enhanced lease and financing terms in the Economic Stimulus Advantage Offer.

Under the new U.S. Economic Stimulus Package, signed into law by the President, business will benefit from:

Bonus Depreciation

HARDWARE,  2008: 60 percent depreciation on new computer hardware rather than the usual 20 percent maximum (effectively an additional 40 percent) 2009-2013: Depreciation would be half the usual amount in each of these years (to offset the bonus depreciation in 2008).

SOFTWARE, 2008: An additional 50 percent first year depreciation on software 2009-2011: Depreciation would be half the usual amount in each of these years (to offset the bonus depreciation in 2008).

Current Expensing of Capital Expenditures for Small Businesses

This provision in effect doubles the benefits of an existing tax write-off for small businesses. Businesses, whose total 2008 capital expenditures from all vendors are $800K or less, will be permitted to immediately deduct up to $250K of purchases in 2008 and depreciate the balance over the life of the asset (5 years for computers, 3 years for eligible software). The $250K deduction is reduced as the amount of expenses exceeds $800K and is totally eliminated at $1.05M. Under prior law, the maximum current deduction was $128K with reductions beginning at $510K.

The new Economic Stimulus Offering by IBM will afford U.S. customers leasing new equipment in 2008 savings via one of two options:

·        A free three month payment deferral on new leases, or

·        Reduced payment rates over the life of the lease.

IBM said that neither it nor Credit LLC intend to offer tax or accounting advice to customers and that they should consult with their own financial and legal advisors pointing out that any tax or accounting decisions made by or on behalf of the customer are the sole responsibility of the customer.

About IBM Global Financing

IBM Global Financing (IGF), the financing business segment of IBM and the world's premier single-source provider for multi-vendor IT financing solutions, serves commercial clients ranging from small businesses to the majority of the Fortune 100. With assets of $34 billion worldwide, IGF provides project financing, commercial financing and asset-recovery services to 125,000 clients in more than 50 countries. Additional information can be found at http://www-03.ibm.com/financing.

 

 

IBM is a leading global hybrid cloud and AI, and business services provider, helping clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently, and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM's legendary commitment to trust, transparency, responsibility, inclusivity, and service.

For more information, visit: www.ibm.com.

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