The American Recovery and Reinvestment Act extends a 50% bonus depreciation allowance for new machine tools and other equipment ordered and placed in service during 2009. Firms should also be aware of an increased Section 179 expense allowance for small business equipment purchases.
The first-year 50% bonus depreciation allows firms to write off an additional 50% of the cost of new equipment purchased and placed into service in 2009. Qualifying firms can receive the 50% bonus depreciation if the new equipment purchased has a recovery period of 10 years or more, takes more than one year to produce, and costs more than $1 million. Provided that these criteria are met, firms are allowed until the end of 2009 to place the equipment into service.
The Section 179 expensing increase to $250,000 is extended for new and used equipment purchases provided that equipment is bought and placed in service in 2009. This amount drops in 2010 to $128,000. The cap on equipment purchases that are subject to the write-off is set at $800,000 in 2009 and $510,000 in 2010.
Firms are strongly advised to consult their CPAs and financial advisors to take maximum advantage of this accommodation.
Tags: Tax incentives