2008 Economic Stimulus Act Provides Tax Benefits to Businesses …

     2008 Economic Stimulus Act Provides Tax Benefits to Businesses

                 Refer to a Certified Public Accountant for these
                  Tax Incentive Applications to Your Business

The full article details, dated 2/21/08, can be found at www.irs.gov/newsroom
WASHINGTON -- In addition to providing stimulus payments to individuals, the Economic Stimulus Act
  of 2008 provides incentives to businesses. These incentives include a special 50-percent
  depreciation allowance for 2008 purchases and an increase in the small business expensing
  limitation for tax years beginning in 2008.

   50% Special Depreciation Allowance

   o This new law allows the taxpayer to recover the cost or other basis of certain property over
      several years, an annual allowance for wear and tear, deterioration or obsolescence of the
      property beginning in tax year 2008. To qualify, the property must be placed in service after
      12/31/07 but before 1/1/09. A new version of depreciation and amortization can be found at
      www.irs.gov and Form 4562-FY

   New Depreciation Limits on Business Vehicles

   o The total depreciation deduction, including the section 179 deduction, a business can take
     for a passenger automobile, which is not a truck or van, used in the business and first placed
     in service in 2008 is $2,960 -- $10,960 for automobiles for which the special depreciation
     allowance applies. The maximum deduction that can be taken for a truck or van used in a
     business and first placed in service 2008 is $3,160 -- $11,160 for trucks or vans for which
     the special depreciation allowance applies.

   Section 179 Expensing

   o Taxpayers can opt to treat the cost of certain property as an expense and deduct it in the year
     the property is placed in service instead of depreciating it over several years. This property is
     frequently referred to as section 179 property, after the relevant section in the Internal
     Revenue Code. Under the new law, a qualifying business can expense up to $250,000 of
     section 179 property purchased by the taxpayer in a tax year beginning in 2008. Absent this
     legislation, the 2008 expensing limit for section 179 property would have been
     $128,000. The $250,000 amount provided under the new law is reduced if the cost of all
     section 179 property placed in service by the taxpayer during the tax year exceeds $800,000.
     The new law does not alter the section 179 limitation imposed on sport utility vehicles,
     which have an expense limit of $25,000