All the hype on the recent tax bill that the President signed was concentrated on the rebates to be paid starting in May, but for small business there were two provisions that are potentially worth a lot more than the $600 rebate.
The first goodie has to do with Section 179 (the expensing provision) that has allowed small businesses to write off equipment purchases instead of depreciation them over multiple years. The new bill doubled the amount of equipment that a small business can write off to $250,000 for 2008. Yes, a qualifying small business can write off the first $250,000 of equipment purchased in 2008 provided the total equipment purchased in 2008 does not exceed $800,000.
The second goodie affects passenger cars. Finally, after keeping the lid on the write offs on cars for the last ten to fifteen years, the new tax act increases the first year write off by $8,000. This is $8,000 in addition to the existing first year maximum of $3,060 for cars under 6,000 GWT. Please note these limits assume that the car is 100% used for business purposes. If the car is used for personal purposes, then these limits are reduced pro rata for the non business use.
Good luck and here’s hoping it “all adds up” for you.
(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at Ginnatycpa@aol.com and if it is of general interest, he will address it in future articles)