What is the impact on your business

Exciting news out of Washington for Small Business Owners, Equipment Vendors, and Manufacturers. On Wednesday Feb. 13th, President Bush signed the ECONOMIC STIMULUS PACKAGE. On top of the consumer based rebates meant to boost spending in 2008, the package included a number of Business Incentives that add up to $44.8 Billion in tax relief for 2008.

While the original Net Operating Loss (NOL) carry-back provision was left out of the final signed version, there is still a massive increase in the expansion of Section 179 (the IRS code governing business expensing).

For small business owners this means a real “shot in the arm” for business equipment investment. For equipment sellers it’s a huge increase in sales because it means a huge incentive for companies to acquire equipment this year.

Enhanced Expense Limits

The new law almost doubles the amount of deductible Code Sec. 179 expensing for 2008 to $250,000 and increases the threshold for reducing the deduction to $800,000. It applies to property purchased and placed in service in tax years beginning in 2008.

This means for the first $250,000 in equipment put into service in 2008 your business gets a 100% tax deduction. If you exceed $800,000 in equipment this expense is reduced.

Call us for strategies that put this benefit to work for you. We can structure finance agreements that allow you to expense the equipment while paying for it over a term of 2-8 years.

Qualifying Property (Equipment)

The new law makes no changes to the general rules for the types of property that are eligible for expensing. Generally, the property must be tangible personal property, which is actively used in the taxpayer's business and for which a depreciation deduction would be allowed.

The property must be used more than 50 percent for business and must be newly purchased property. The existing exception for computer software applies to the enhanced expensing amounts under the new law.
To be eligible to claim bonus depreciation, property must be (1) eligible for the modified accelerated cost recovery system (MACRS) with a depreciation period of 20 years or less; (2) water utility property; (3) computer software (off-the-shelf); or (4) qualified leasehold property. The property generally must be purchased and placed in service during 2008.