Business Tax Planning

There’s a new twist on an existing option for accelerated write-off of assets you purchase from September 9, 2010 through December 31, 2011. You can choose to expense 100% of the cost of new equipment, such as machinery, some vehicles, and computers under expanded “bonus” depreciation rules.

While this sounds similar to Section 179, which also allows immediate expensing of assets you’d otherwise have to write off over several years, differences between the two methods exist. For instance, the amount of Section 179 expensing you can claim may be limited by your income. In contrast, bonus depreciation can create an operating loss that you may be able to carry back to prior years to generate a refund. Also, bonus depreciation is available only for new assets; Section 179 expensing applies to both new and used assets.

And what about the rules for Section 179? The expensing limit was increased to $500,000. Your deduction begins to shrink if you buy more than $2 million of assets.

Another depreciation break was also extended: the 15-year life for certain leasehold and retail improvements and restaurant buildings and improvements. These assets will no longer qualify for 15-year depreciation after 2011.

Check out this tax break if your business has fewer than 25 full-time employees: You might qualify for a tax credit of up to 35% of employer-paid health care costs.

We can help you with your tax planning. Please give us a call and see us on our website at www.mariscpa.com. Thanks for reading.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com