I’ve heard many perspectives on the Economic Stimulus Act of 2008. Along the way perhaps the most common comment is that the Act did very little (I chose those words very carefully) for me or my business — for Main Street.
Let’s focus on some positives!
Sometimes overlooked in the Act are the incentives of Section 179 Deductions that have been materially improved. Contrary to the benefits of the somewhat similar Bonus Depreciation that typically accrues only to billion dollar companies, Section 179 provides some very real growth opportunities to Main Street, if you’re aware and if you take advantage of these incentives.
Simply stated, Section 179 provides for the full purchase price deduction (for tax purposes rather than the depreciation expense reflected in your financial statements) in the year an asset is placed in service. For 2011 the Section 179 limit has been doubled to $500,000. Importantly, assets that qualify are broad and include, among other:
- Software, computers, machinery, vehicles and furniture.
- Tangible personal property used in your business.
- Purchased or leased equipment.
New and used assets qualify contrary to the Bonus Depreciation benefit. Qualifying new equipment purchases above the Section 179 $500K cap remain eligible for Bonus Depreciation up to $2 million for 2011.
Assets purchased or leased for Part Business / Part Personal use. In this case the business deduction is based upon the percentage the asset is used for business purposes, nonetheless, this remains a very real incentive.
It’s likely your business has or will purchase many of these goods this year. Section 179 and Qualified 179 Financing are designed to make this financially attractive.
If you are not taking advantage of these opportunities, considering in your ’11 strategy and beyond or being properly advised – you should be!!