2009 American Recovery and Reinvestment Act
| February 26, 2009The Section 179 Federal Income Tax Deduction has been increased as part of the American Recovery and Reinvestment Act of 2009 and it allows a company to deduct the first $250,000 of equipment (Section 179 Property) purchased in 2009 from their taxable income. For companies purchasing (or leasing – with a $1.00 buy-out lease) up to $800,000 of equipment in 2009, this deduction is available in full. It then phases out on a dollar-for-dollar basis between $800,000 and $1,050,000.
50% First Year Bonus Depreciation
The American Recovery and Reinvestment Act of 2009 also allows for a special 50% Bonus Depreciation for NEW equipment placed in service during 2009 for the production of income before January 1, 2010. This deduction allows an additional 50% first-year depreciation on the adjusted basis of qualified new equipment.
EXAMPLE OF 2009 TAX STIMULUS
$500,000 New Machinery Equipment Acquired in 2009
$250,000 Extended Section 179 Deduction
$125,000 50% Bonus Depreciation of the Balance of $250,000.
$17,862.50 14.29% Standard Depreciation
$392,860.50 Total First Year Deduction
$137,501.88 Cash Savings based on Company with 35% Tax Rate
Note: Machine tools and fabricating equipment are typically depreciated over 7 years. Please consult with your accountant. The above calculations are only estimates and everyone’s tax situation is different.
CONTACT THE EXPERTS TODAY AT:
1-800-886-1469 OR www.techfin.net
Mark Charlton markc@techfin.net
Tim Murphy timm@techfin.net
Ann Nowacki annn@techfin.net
