Bonus Depreciation
When does adding a new Mack truck subtract from your business? When can you depreciate 50% of its purchase cost on your 2009 tax bill?
Now is the perfect time to put a new Mack truck to work for you! Legendary for their durability and reliability, Mack trucks start delivering value the moment their tires hit the ground. And by taking advantage of the American Recovery and Reinvestment Act of 2009, you can reap more value from your new Mack trucks by claiming a first-year depreciation of 50%.
Reduce your tax liability. Improve your cash flow. Here's how.
On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the economic stimulus package) was signed into law. This Act extends the 50 percent bonus tax depreciation allowed in 2008 to all equipment placed in service prior to January 1, 2010.
What is Bonus Depreciation?
For qualifying equipment, the Act allows the buyer to take 50% first year Bonus Depreciation deduction on 2009 taxes.
- The Act allows additional first-year depreciation of 50% of purchase cost.
- Bonus Depreciation helps businesses that buy equipment this year to reduce their 2009 taxable income.
- Applies to purchase of tangible property with a MACRS recovery period of 20 years or less.
- Equipment must be new, purchased, and placed in service prior to January 1, 2010.
- Not applicable if a binding purchase contract existed prior to 1/1/08.
- The Bonus Depreciation is due to expire 12/31/09.
What is Section 179?
Section 179 allows small businesses to expense up to 100% of the equipment cost in year one.
- Eligibility for this deduction is based on the total amount of the small business' capital expenditures during 2009.
- This deduction can be combined with Bonus Depreciation.
- If total capital expenditures total less than $800,000, owner may qualify for a dollar-for-dollar deduction, up to $250,000.
- Every dollar spent over $800,000 is subtracted from the total deduction amount. If a company's capital expenditures exceed $1,050,000 the company does not quality for Section 179.
- Limited to pre-deduction income, but any disallowed deductions can be carried forward indefinitely.
- Equipment can be new or used. Must be placed in service in 2009.
- Maximum allowable Section 179 deduction is due to decrease after 12/31/09.
Don't miss this opportunity -- these incentives end December 31, 2009. Visit your local Mack dealer today and find out how easy it is to drive away in a new Mack truck!
This overview is not intended to provide tax or accounting advice. Contact your tax adviser with tax questions about potential tax savings and for details regarding the bonus depreciation in 2009.
