900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 · 215.563.0276 · Fax: 856.667.3652

Tax Tip of the Week
For the week of
July 7, 2003

Reduce taxes when you make business purchases

The new tax law offers two ways to take faster tax write-offs when you buy equipment for your business.

Expensing increases to $100,000. First, you can now take an immediate tax write-off for up to $100,000 of the cost of business equipment purchased and placed in service this year. Under the old law, the limit for 2003 was $25,000. The advantage of expensing is that you write off the entire cost immediately, instead of deducting it as depreciation expense over several years. The new $100,000 limit will be indexed for inflation in 2004 and 2005.

You're most likely to benefit from this rule if your business is small or mid-sized. That's because the expensing amount begins to phase out when your annual equipment purchases reach $400,000. Most tangible personal property used in your business qualifies for the break, whether you buy it new or used. Land, buildings, and certain other kinds of property aren't eligible.

Bonus depreciation increases to 50%. Under the new tax law, you can also claim higher bonus depreciation on new equipment purchases. Previously you could deduct bonus first-year depreciation of 30% of the equipment cost. For purchases made on or after May 6, 2003, you can claim 50% bonus depreciation. The old 30% bonus applies to purchases made before that date (though you may elect to continue to use the 30% rate even after that date). Eligible equipment includes most new business equipment and certain leasehold improvements.

You'll need to do some careful planning to achieve the maximum benefit from these two tax provisions. You should first put together your business spending plans for the next two or three years. Then call us so that we can review your situation and make sure you're maximizing your tax savings.






Prior Tax TipsClick here to view previous tax tips.

"Tax Tips" are published weekly to provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders, and current tax information.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax-cutting information from time to time, please contact our office. We're here to help.

Home

 
 

untitled

This site designed and maintained by the Information Technology experts at Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co.

We appreciate comments concerning our website. Contact our webmaster .