Now is the time to purchase fixed assets
May 8th, 2009
Time has not yet run out on the opportunity to take advantage of the 50-percent first-year, or bonus, depreciation for most new restaurant equipment and certain leasehold improvements placed in service before Jan. 1, 2010. Please note that the payment date does not determine the date placed in service.
Taxpayers can also still take advantage of the increased Section 179 expense for qualifying assets. For tax years beginning in 2009, the expensing limit is $250,000 and the investment ceiling limit is $800,000. The amount eligible to be expensed can’t exceed the taxable income from the active trade or business.
Unless there are further law changes, the bonus depreciation goes away after 2009. For 2010, the Section 179 limits fall to $125,000/$500,000, adjusted for inflation, and then to $25,000/$200,000 for 2011 and beyond. Given the lead time required to place equipment orders, process loan requests, and schedule and complete installation, now is the time to begin the process.
Keep in mind that the bonus depreciation and Section 179 deductions are merely timing differences as to what year or years the cost of the assets will be deducted. Larger deductions this year mean smaller deductions in future years.
If you don’t use these accelerated write-off opportunities, you still write off all of the asset’s cost — just over a longer period of time. Also, please note that many states did not adopt these federal accelerated expensing options; therefore, individual state taxable income could be significantly higher than federal.
Please contact us at 770-785-7855 with any questions.
