Section 179 & Special Bonus DepreciationSection 179 Expensing and the 50% Special Bonus Depreciation Allowance has made 2008 the best year ever to obtain the new equipment your business needs. President Bush signed the 2008 Economic Stimulus Act (ESA) on February 13, 2008 making this year YOUR year to finance equipment and machinery. Enjoy serious tax advantages and lower your 2008 tax bill now. Here are the nuts and bolts of the 2008 Economic Stimulus Act. Section 179 Expensing A business which qualifies may write off the full purchase price of equipment and machinery up to $250,000 in year 2008. That is an increase of $125,000 from year 2007. Tax Code Sect. 179 is treated as an expense deduction for those that elect this deduction rather than writing off the equipment as a capital expense. To qualify the equipment and machinery must have been purchased and placed in service after December 31, 2007 and prior to January 1, 2009 to enjoy the Sect. 179 expensing. 50% Special Bonus Depreciation Expense The first year special bonus depreciation is for tangible property depreciated under the Modified Accelerated Cost Recovery System (MACRS) with a recovery period of 20 years or less. Most equipment and machinery qualify under this deprecation method. The first year 50% additional bonus depreciation allows an additional deduction of 50% of the equipment or machinery’s depreciable basis after any Sect. 179 deduction (above $250,000) and prior to figuring your regular depreciation deduction. To qualify the equipment and machinery must have been purchased and placed in service after December 31, 2007 and prior to January 1, 2009 to enjoy the 50% special bonus depreciation expense. The new Tax Law favors a Non-Tax or Capital Lease – the type of Equipment Lease we recommend over a traditional True Lease. For specifice details about how the 2008 Economic Stimulus Act can impact your business, contact your tax professional or visit the Internal Revenue Service website at www.irs.gov
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