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| September 03, 2008 |
TIME RUNNING OUT – LOCK IN TAX DEDUCTIONS BY PURCHASING CAPITAL EQUIPMENT BEFORE DECEMBER 31, 2008
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SECTION 179 EXPENSING FOR EQUIPMENT PURCHASES
For tax years beginning in 2008, businesses may fully deduct up to $250,000 spent on fixed assets (machinery, equipment, furniture, computers). The $250,000 maximum deduction begins to phase out when total asset purchases exceed $800,000 in any one year.
Depending on your particular circumstances, it may benefit you to purchase and take delivery before the end of your fiscal year. For others, it may benefit you to delay delivery until after the start of your new fiscal year.
Contact us and we will help you decide which approach is best.
BONUS DEPRECIATION
This new tax break expires on December 31, 2008 so you need to act quickly if you are going to take advantage.
Bonus depreciation = 50% of the cost of property placed in service in 2008. There is no limit to the amount of asset purchases.
The property must be placed in service before January 1, 2009 to take advantage of this limited-time tax break. So if you are considering near-term asset acquisitions, you need to make a decision soon.
Qualifying property includes 1) tangible property with a recovery period not exceeding 20 years, 2) purchased computer software and 3) qualified leasehold improvement property. The property purchased must be new – cannot be used.
This one-year-only tax break may impact your ability to take advantage of the Section 179 expensing election (see above). Contact us and we will help you sort it out.
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