Photo from Threshold.ie

This Bonus Depreciation program allows businesses to take the full deduction of qualifying assets purchased between now and December 31, 2011 on their 2011 tax return (instead of depreciating the value over the typical seven years), advises NBF.com.   Equipment placed in service after December 31, 2011 and through December 31, 2012 or purchases made between January 1, 2010 and September 8, 2010 still allows for a 50 percent depreciation bonus.  The CCH Group also instructs that, “Unlike Code Sec. 179 expensing, it (Bonus Depreciation) is not limited to use by smaller businesses or capped at a certain dollar level.”

According to WhiteHouse.gov, this depreciation break is, “The largest temporary investment incentive in American history” and “could generate more than $50 billion in additional investment in the U.S. in 2011.”  While this offers a wonderful opportunity for your business to become modernized, it also frees dollars up that could be used to create jobs and boost the economy overall.  Joni Fritsche, tax director with Burr Pilger Mayer in Santa Rosa, California told the North Bay Business Journal that,  “What Congress is doing in this area is economic planning and economic stimulus for a period of years on a moving forward basis.”  Essentially, while at the more local level the government is providing a boost for your business, on a higher level they are putting assets back into use to enhance the country’s economy in the long term.

Photo from BeaconFuning.com

What does all of this mean for your business?  It’s time to bring that kitchen into 2011!  In actuality, it’s an opportunity for you to buy that new fridge you’ve needed for months and use the cash back to do things like finance an expansion or pay off the purchase itself.   However, there are a few stipulations other than purchase dates.   The first, informs depreciationbonus.org,  is that any equipment acquired must be new.  The property must also be specifically used for production in your business and considered to have a useful life of a year or more.  Unfortunately, reminds hotelmule.com, this means items like linens, plates and glasses do not qualify for the program.

Take advantage of this opportunity now, by viewing qualifying products from Central Restaurant Products.  Get great deals on ovens, refrigerators, furniture and more while reaping the benefits of Bonus Depreciation!

The information above is not tax advice and situations can vary.  Central Restaurant Products encourages you to consult your tax attorney for details before making any purchases.  To learn more about the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 here.

The Coalition says that a seamless extension is essential to provide businesses with the certainty they need to undertake capital expenditures, which are critical to fueling economic activity and creating jobs.

History the the 15-Year Depreciation…

A provision in the American Jobs Creation Act of 2004 shortened the depreciation period for qualified improvements to leasehold and restaurant property from 39 to 15 years. The provision applied to improvements that included new HVAC systems or refrigerators, and expired December 31, 2007; the EESA reinstated the allowance for the accelerated depreciation for leasehold and restaurant improvements retroactively from January 1, 2008 until December 31, 2009.

EESA also expanded the depreciation allowance to include improvements to retail buildings and new restaurants for 2009.

Other incentives – Section 179

Also this year, Congress increased the amount that small businesses can write off for capital expenditures to $250,000. Operators can take advantage of these incentives by purchasing new equipment during the 2009 calendar year. The law also maintains the bonus depreciation of 50% for qualifying assets. This bonus is in addition to regular first-year depreciation.

• What is Section 179?
• Lease Benefits
• Savings Calculator

Sample Calculation:

Assume you finance $300,000 worth of business equipment, put it to use in 2009, and take advantage of Section 179. Your TAX SAVINGS could be significant.

1st Year Write Off:

 
• Section 179 $250,000
  ($250,000 is the maximum write off in 2009)
• 50% Bonus Depreciation $25,000
  (On remaining value: $300,000-$250,000=$50,000×50%=$25,000)
• Normal 1st Year Depreciation $5,000
  (Depreciation calculated at 5 years=20%; $25,000×20%=$5,000)
• Total 1st Year Deduction $280,000
  ($250,000+$25,000+$5,000=$280,000)
• Tax Savings Assuming 35% Bracket $98,000
  ($280,000x.35=$98,000)

1st Year Net Cost After Tax Savings: $202,000

Qualifying Products:

Business owners who acquire equipment including machinery, computers, and other tangible goods, usually prefer a substantial deduction in a single tax year, rather than a little at a time over a number of years. This accelerated deduction is known by its section in the tax code: a Section 179 deduction. The 2009 law extends the amount of qualified property that a business can expense under Section 179 to $250,000.This incentive is for equipment placed in service by December 31, 2009 and is designed for small companies, so the deduction phases out when a business purchases more than $800,000 in one year. (Companies cannot write off more than their taxable income).

View qualifying products. (Please contact your tax advisor to confirm the specific product you are interested in qualifies under the Section 179 prior to purchase.)