Economic Stimulus Bill has Incentives for Equipment Purchases
Written By: Bastian Media
Although the business incentives have been overshadowed in the news by the
individual tax rebates, the business tax breaks are very valuable. This can be broken
down into two primary areas:
Expensing election for Small Business
The new law doubles the amount of equipment that can be expensed in the year of
purchase. For equipment purchased (and placed in service) for tax years beginning
in 2008, 100% of the cost of the equipment can be written off for tax purposes, UP
TO $250,000. This applies only in 2008.
If a business purchases more than $1,050,000 in equipment in 2008, this expensing
election is not available, but see the benefits of temporary bonus depreciation below.
Remember, the equipment has to be placed in service in 2008 to qualify, so get your
orders in NOW!
Temporary bonus depreciation
Congress has used bonus depreciation in the past to encourage business investment
(post September 11). The new law allows qualifying taxpayers 50% of the cost of
qualifying equipment as first year bonus depreciation. As with the expensing election
above, this provision is for equipment placed in service in 2008.
The 50% bonus depreciation can be taken even if you exceed the $1,050,000 of
equipment purchased in 2008, so even larger businesses can take advantage of this
provision.
Bonus depreciation is only available for new equipment (not used). Remember, this
bonus depreciation is on top of regular depreciation claimed for tax purposes.
As you can see, these provisions have the ability to greatly enhance the return on
your investment (ROI) for purchasing equipment in 2008.
NOTE: As always, consult your tax advisor to ensure that these benefits will be
applicable to your particular situation.
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