The tax law changes so often that it’s easy to lose track of current rules. As you make business purchasing decisions this year, keep these facts in mind.
* Bonus depreciation is available only for NEW equipment purchases. 50% bonus depreciation can be taken on purchases made in 2010 through September 8. On purchases made from September 9, 2010, through December 31, 2011, 100% bonus depreciation can be taken. In 2012, bonus depreciation reverts to 50%.
* First-year expensing under Section 179 is available for both NEW and USED equipment purchases. The expensing limit for 2010 and 2011 is $500,000, with a reduction once purchases exceed $2,000,000. In 2012, the expensing limit is scheduled to revert to $125,000, with a dollar for dollar reduction once purchases exceed $500,000.
* Effective for 2010 and 2011, certain leasehold and retail improvements and restaurant buildings and improvements qualify for 15-year depreciation. Some may also qualify for bonus depreciation and/or first-year Section 179 expensing. The rules determining eligibility are complex.
For help in deciding how to maximize the tax benefits available for your business purchases, give us a call.David Bradsher, CPA