Section 179 & Bonus Depreciation-They are Here to Stay!
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Act) became law on December 17, 2010. Aside from effectively continuing the Bush tax cuts from 2001, the Act increases BONUS DEPRECIATION and expanded Section 179…
Bonus Depreciation
The Act extends for two years current-law bonus depreciation under section 168(k), which allows 50 percent bonus depreciation for qualified property. Bonus depreciation will be available for qualified property placed in service before January 1, 2013 (or before January 1, 2014, in the case of certain long-term production property). Under a special rule, if qualified property is acquired and placed in service after September 8, 2010, but before January 1, 2012, the bonus depreciation amount is increased from 50 percent to 100 percent. In other words, the Act does not alter the 50 percent bonus for property placed in service through September 8, 2010, but allows taxpayers to currently deduct (that is, “expense”) 100 percent of their basis in qualified property placed in service during the period from September 9, 2010, through December 31, 2011. For 2012, the bonus depreciation amount reverts to 50 percent of the taxpayer’s basis in any qualified property placed in service during that calendar year.
Section 179 limitation
The SBJA raised the section 179 small-business expensing limitation for tax years beginning in 2010 or 2011 to $500,000. The limitation is reduced for those years if the cost of the section 179 property exceeds $2 million. After 2011, the limitation was set to return to $25,000 and the reduction was set to return to $200,000.
The new Act provides an additional year of increased section 179 expensing, but not at the levels in effect for 2010 and 2011. For tax years beginning in 2012, the limitation is raised to $125,000, and the reduction begins at $500,000. Those amounts will return to $25,000 and $200,000, respectively, after 2012.
CLICK HERE to go to the AED (Associated Equipment Distributors) DEPRECIATION website!
Please consult your tax advisor for more information about depreciation or visit the Internal Revenue Service website. The above should not be construed as tax advise or as a promise of potential tax savings or reduced tax liability.
James River Equipment carries the complete line of John Deere tractors, industrial and forestry machines, and many quality complimentary lines including Morbark, Finn Blowers and Hydro-Seeders, Wirtgen Milling Machines, Vogele Pavers, Hamm Compaction Rollers, and much, much more. Call your James River Equipment location to learn more.