2008 DEPRECIATION RULES ENHANCED
The February 13, 2008 passage of the Economic Stimulus Act of 2008 provides businesses the opportunity to expense more of their 2008 fixed asset purchases. In addition to increasing the Section 179 limit to $250,000, which allows businesses to expense eligible property placed in service during the year, this Act also permits taxpayers to deduct an additional 50% “bonus” depreciation expense on the adjusted basis of the assets placed in service during 2008.
If you are a business owner contemplating a purchase, consider making it in 2008. The increased section 179 limits as well as the special 50% bonus depreciation end on 12/31/2008. One caveat to keep in mind is that most states will not likely follow these increased federal deduction provisions, which will require separate state depreciation schedules to be maintained.
To read more about these provisions, please click on the link below:
http://www.irs.gov/newsroom/article/0,,id=183867,00.html
Here is a quick example of the maximum federal and Maryland depreciation expense for a business that purchases $500,000 of qualifying 5-year depreciable property in 2008:
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| Section 179 expense |
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| 50% “bonus” depreciation |
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| Regular MACRS depreciation |
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| Total 2008 depreciation expense |
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$120,000 |
If you have any questions or comments about these new depreciation provisions, please contact us.