Take new depreciation rules into account in your business planning

Posted on Apr 15, 2011

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.

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