Economic Stimulus Plan Extended

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA) into law. This extends the benefits of the Economic Stimulus Act of 2008 and increases other expensing benefits for small businesses. Here’s an overview of the current Depreciation Bonus and Sec. 179 Expensing guidelines:

Depreciation Bonus

  1. Sec. 1201 of the 2009 American Recovery and Reinvestment Act (ARRA) allows additional first-year depreciation of 50 percent of purchase cost by extending one year the depreciation bonus created by the 2008 Economic Stimulus Act
  2. Depreciation bonus helps businesses that buy equipment this year to cut their 2009 tax bill
  3. It applies, among other things, to purchases of tangible personal property (including construction, mining, forestry, and agricultural equipment) with a MACRS recovery period of 20 years or less
  4. Equipment must be purchased and placed in service in 2009
  5. Equipment must be new
  6. You may not claim the depreciation bonus for 2009 if a binding purchase contract existed prior to Jan. 1, 2009 (but you may be eligible for the 2008 depreciation bonus – consult your accountant)
  7. Allowed for both minimum and alternative tax purposes
  8. Discretionary – Taxpayer need not claim the depreciation bonus
  9. Depreciation bonus will expire at the end of 2009

    10. Sec. 179 Expensing

  10. Sec. 1202 of the ARRA extended for one year the increased Sec. 179 expensing limit of $250,000 and phase-out cap to $800,000
  11. Companies can expense up to $250,000 in purchases as long as they don’t spend more than $800,000
  12. Expensing is phased-out for each dollar that purchases exceed $800,000
  13. Companies with total purchases of $1,050,000 cannot use Sec. 179
  14. New and used equipment is eligible for expensing
  15. Applies to tax years that start in 2009
  16. Can be combined with depreciation bonus
  17. Sec. 179 expensing levels will drop at the end of 2009 (without ARRA, the 2009 expensing amount would be $130,000 and the phase-out level would be around $500,000

Taking advantage of the American Recovery and Reinvestment Act (ARRA) will cut your 2009 tax bill and allow you to buy the equipment you need. If you need assistance, contact your National sales representative. For more details, log on to www.depreciationbonus.org

 

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