As the year winds down, data center vendors and service providers will be pushing to close deals before December 31. While a signed contract is great for us, what’s the motivation for you – the facility – to get things done?
With the 100 percent bonus depreciation deduction passed by Congress last year, there’s actually real incentive for you to not only sign a contract, but also install in the same calendar year. More good news: there’s plenty of efficiencies to be achieved that can qualify for this deduction. Everybody wins!
Understanding the Deduction
Tax reforms passed in 2017 offer businesses and manufacturers 100 percent bonus depreciation on qualified property and equipment. The U.S. Treasury’s recent clarifications to the law shed light on this lucrative benefit. To claim 100 percent bonus depreciation deductions in the 2018 calendar year, the purchases must meet the following criteria:
- Qualify for modified accelerated cost recovery system (MACRS) depreciation,
- Have a recovery period of 20 years or less,
- Be purchased from an unrelated party, and
- Be purchased (signed contract) and placed into service (installed) during the same calendar year.
Despite having just a few months left in the year, substantial improvements can be made in your data center. While a custom-built solution or ground-up construction isn’t realistic, it is still possible to improve airflow and containment, mitigate power interruptions, or better optimize existing infrastructure. Just some of the standard, yet impactful solutions a data center vendor should be able to provide and install before December 31 include:
- Air flow management accessories such as blanking panels, filler panels, under floor baffles
- Aisle containment doors, panels, curtains
- Standard rack power strips
- Desktop, rack-mount, tower, and small, modular uninterruptible power supplies
- Leak detection cables and appliances
- Environmental monitoring appliances and sensors
- KVM, serial and extension appliances
- Cabinets or media storage units
With these solutions, you may help your company achieve real tax savings while significantly improving the efficiency and uptime of your data center.
*This material is for informational purposes only. It’s not intended to provide and should not be relied on for tax advice. Please contact your tax advisor when planning your year-end tax strategies.
About the Author
Mike McClain is the Chief Executive Officer of Critical Environments Group. He has more than 25 years of financial and executive business management experience. Mike is also a CPA and a member of the American Institute of Certified Public Accountants.
CEG is a national provider of data center and critical environment infrastructure optimization solutions. The Company was recently named by Inc. 5000 as one of the fastest-growing data center solution providers in the United States. For more information, please visit www.criticaleg.com.
CEG LinkedIn: https://www.linkedin.com/company/criticaleg/
Mike McClain LinkedIn: https://www.linkedin.com/in/mike-mcclain-a972714/