Yesterday, I examined the rebate provisions of H.R. 5140, the "Economic Stimulus Act of 2008." Today, I will be looking at the business investment provisions. A detailed explanation of these provisions can be found here.
There are two basic components to the business investment side of this law: 50% partial expensing (somewhat comically called "bonus depreciation"), and increased Section 179 small business expensing. We'll take each one separately...
Those not familiar with the tax treatment of business investment will first want to read my post on depreciation.
In addition to the depreciation provisions under current law, taxpayers can elect to use one or both of the following for assets purchased in 2008:
Small Business (Section 179) Expensing
The applicable limit for 2008 is lifted to $250,000 of qualifying property. The phaseout of 179 eligibility is increased to a range of $800,000-$1,050,000 of qualifying property placed in service. After 2008, current law applies (with its puny 179 limit of $25,000 and a phaseout range of $100,000-$125,000), unless Congress extends 2008 law.
50% Partial Expensing
For qualifying property placed in service in 2008 (and some very limited exceptions for 2009), a taxpayer may elect to expense half the cost, and subject the remaining half to the usual depreciation rules.
Qualifying property includes MACRS property with a recovery period of 20 years or less, water utility property, computer software property not an intangible asset, and qualified leasehold improvement property.
In a little-noticed provision, the luxury car limit is increased in the first year to $8000, roughly doubling its value.
Will people who are non-dependants that took the lifelong learning credit be receiving a rebate under this tax package?
Posted by: Rocky | 2008.05.01 at 12:35 PM