Late 2009 Tax Planning – Equipment Purchases

 
photo credit: Powerhouse Museum

Joe,
Are there some tax rules my small business could take advantage of before the end of 2009?

Brad, Bloomington, MN

Dear Brad, 

That’s a good question. There are two favorable items due to expire on December 31, 2009.

1. Bonus depreciation. The 50 percent first-year bonus depreciation (for new equipment) is due to expire at the end of 2009. What this means is that 50% the cost of the new asset may be depreciated in addition to using the standard depreciation tables. Also, the $8,000 additional first-year depreciation allowed for new vehicles placed in service ends in 2009. For bonus depreciation to apply, the equipment must be placed in service by the end of 2009.
2. Code Section 179 expensing. Although this does not affect many clients, the limit for Code Section 179 expensing drops from $250,000 in 2009 to a maximum of $125,000 in 2010.

The rules are somewhat complex and you should review the specifics with your tax professional. 

For more information, visit:  http://www.irs.gov/businesses/small/article/0,,id=213666,00.html

Joe

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