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Tax Tip of the Week
For the week of
April 28th, 2008



New law provides tax break for buying business equipment

Are you thinking of buying business equipment this year? If so, you'll be happy to know the Economic Stimulus Act of 2008 includes changes to federal tax depreciation rules that can save money on your return.

Here's a summary.

  • Section 179. Under the new law, you can expense up to $250,000 of qualifying assets immediately instead of having to spread depreciation deductions over several years. Prior to the change, the limit was $128,000.

    The Stimulus Act also raises the dollar amount of the Section 179 phase-out. That means you can buy more assets — and still claim a full deduction. The phase-out now starts at $800,000, up from $510,000.

    The increased Section 179 limits are available only to tax years beginning in 2008, and apply to new and pre-owned property that you use in your business.

  • Bonus depreciation. Along with the higher Section 179 expensing, the new rules offer a bonus: a special depreciation deduction of 50% of the cost of new business assets that you buy and place in service during 2008.

    In addition to most new machinery and equipment, off-the-shelf computer software qualifies, as do some leasehold improvements.

    This provision also bumps up the maximum amount of first-year depreciation you can claim for automobiles used in your business by as much as $8,000. The limit for sport utility vehicles remains unchanged.

Please call our office for information about these and other depreciation breaks. We'll work with you to plan asset purchases so you achieve the maximum tax benefit.




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