|
POWERFUL
TAX INCENTIVES FOR EQUIPMENT PURCHASES ENACTED IN
2010
100%
BONUS DEPRECIATION THROUGH 2011, 50% BONUS DEPRECIATION
IN 2012
INCREASED SECTION 179 “SMALL BUSINESS” EXPENSING THROUGH
2011
|
100%
Bonus Depreciation can be taken on new equipment
purchased and placed in service after September
8, 2010 and through December 31, 2011. For the
2012 tax year, 50% Bonus Depreciation on new equipment
purchases is allowed. |
| |
|
|
The
boost to $500,000 in Section 179 expensing is
extended for new and used equipment purchases
ordered and placed in service in the 2010 and
2011 tax years. Moreover, the cap on how much
equipment can be purchased to fully enjoy the
write-off increases to $2 million (after which
the amount that can be deducted phases out dollar
for dollar). |
| Here’s
how the new provisions work for you and your
customers: |
|
Let’s
assume that the Peekless KeyHole Co.* retools
their facility with NEW equipment totaling $800,000.
Under the new law, Peekless can write off 100%
($800,000) of the asset in the first year. |
|
Now
assume that the Peekless KeyHole Co.* retools
their facility with USED equipment totaling $800,000.
Under the new Section 179 extension, Peekless
can write off 68% of the asset in the first year,
as opposed to 27% had enhanced Section 179 not
been enacted for the 2010/2011 tax years. |
|
In
2012, if the $800,000 purchase is NEW equipment,
Peekless can write off 64% of the asset using
50% bonus depreciation together with a lower Sec.
179 allowance ($125,000 for purchases up to $500,000). |
100%
BONUS DEPRECIATION/SECTION 179 BOOST THROUGH
2011 |
|
Companies,
whose total equipment purchases (new and
used) don’t exceed $2 million, can expense
the first $500,000 of their used equipment
purchases for the 2010 and 2011 tax years.
For new equipment, 100% of the purchased
can be expensed in the first year. |
|
|
New
2010/2011 |
|
| |
100%
Bonus Depreciation |
= $800,000 |
| |
TOTAL
First-year Deduction |
=
$800,000 – 100% write-off in 1st yr. |
|
|
New
2010/2011 LAW - $800,000 |
|
| |
Sec.
179 Deduction |
= $500,000 |
| |
PLUS14%
on remaining basis ($300K) |
=
$ 42,000 |
| |
TOTAL
2010/2011 Deduction |
=
$542,000 – 68% write-off in 1st yr. |
| IN
2012, 50% BONUS DEPRECIATION COMBINES
WITH A LOWER SEC. 179 ALLOWANCE |
|
A
lower Sec. 179 allowance ($125,000 on purchases
up to $500,000) can be combined with 50%
Bonus Depreciation on NEW equipment purchases
in 2012. |
| |
2012
Sec. 179 Deduction |
= $125,000 |
| |
PLUS
50% Bonus Depreciation on remaining basis
($675K) |
=
$337,500 |
| |
PLUS
14% on 1st year basis ($337.500) |
=
$ 47,250 |
| |
TOTAL
2010 Deduction |
=
$509,750 – 64% write-off in 1st yr. |
*
Examples assumes a 7-year asset depreciation
class |
|
If
you have any questions, contact Amber Thomas,
Government Relations Director, AMT, by email
at athomas@amtonline.org
or by phone 703-827-5230 |
| Information from AMT- The
Association For Manufacturing Technology, December
17, 2010 |
|
