Business Tax Incentive for Property Purchased
Business owners should be aware of the Section 179 and bonus depreciation tax deductions announced in the American Recovery and Reinvestment Act of 2009. For qualifying property purchased during 2009, businesses are allowed to take Section 179 deductions up to $250,000 on the full purchase price of qualifying equipment purchased or financed from your gross income. The limit to the total amount of equipment purchased is $800,000. Qualifying property includes:
- Equipment for business use
- Tangible personal property used in business
- Business vehicles with a gross vehicle weight in excess of 6,000 lbs
- Computers
- Off-the-shelf computer software
- Office furniture
- Office equipment
- Property attached to your building that is not a structural component of the building
- Equipment purchased for business and personal use, deduction based on the percentage of time it is used for business purposes
You may also take 50 percent bonus depreciation for property placed in service in 2008 and 2009. The tax break has been extended for property with longer production periods. The bonus depreciation allowance is available for property depreciable under MACRS and has a recovery period of 20 years or less; water utility property; off-the-shelf computer software; or qualified leasehold improvement property.
For businesses who have delayed capital expenditures, this may be a good time to take action. Equipment and motor vehicle dealers are discounting across the board, and the IRS will subsidize a portion of the cost.
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