Quality Magazine

Business Tax Incentives Expire Soon

October 15, 2009

MCLEAN, VA - Two business tax incentives designed to encourage investment in plants and equipment are expiring at the end of this tax year. The 50% depreciation bonus and extension of enhanced Sec. 179 "small business" expensing provisions were enacted as part of President Obama's Recovery Act. They apply to capital purchases made and placed in service during the 2009 taxable year. That means there are only a few weeks left to take advantage of the sales opportunity these incentives provide to your U.S. customers.

The bonus depreciation provision allows businesses to expense 50% of new equipment purchases bought and placed in service by the end of this 2009 tax year. In addition, enhanced Sec. 179 small business expensing permits companies whose 2009 total equipment purchases (new AND used) don't exceed $800,000 to expense the first $250,000 of those purchases. The 50% bonus depreciation can then also be taken on the remaining basis of the new equipment purchases.

The Association for Manufacturing Technology (AMT) is a leader in the effort to extend these depreciation incentives, but a successful outcome is anything but certain. Right now, the congressional agenda is focused on health care, appropriations, and energy. Plus, members of Congress are reluctant to support additional economic stimulus which will cost more federal dollars. If these incentives are allowed to expire, the 50% depreciation bonus disappears entirely in 2010 and the Sec. 179 expensing amount falls to 2007 levels ($125,000 for purchases not exceeding $500,000), indexed for inflation. So now is the time to take advantage of them.

For more information, visit http://amtonline.org.