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Write off business equipment purchases faster under the new law Businesses received a new tax break from the economic stimulus package recently signed by President Bush. Under the new law, businesses can write off the cost of certain new equipment purchases and property improvements more quickly than previously allowed. When you buy machinery or equipment for your business, you can write off or depreciate the cost over the useful life of the asset. There's also a special tax break, called the Section 179 deduction, that allows small businesses to write off a certain amount of equipment costs in the year of purchase. Now the new law adds another option for businesses called "bonus" depreciation. Take "bonus" depreciation. The new 30% bonus depreciation provision applies to most office furniture and software, most machinery and equipment purchases, and certain property improvements placed in service after September 10, 2001, and before September 11, 2004. Only new (not used) property is eligible for bonus depreciation. Here's an example: Say you bought a new $100,000 machine on October 15, 2003. You can write off $30,000 (30% of the cost) in 2001. This is in addition to any Section 179 depreciation taken and the regular first-year depreciation deduction. If you're in the 30% tax bracket for 2003, the bonus depreciation will reduce your taxes by $9,000. For details about the new law or for assistance in preparing or amending your income tax return, give us a call. We are here to help. If you have questions or need assistance with filing an extension, call us at (703) 370-0019 or email at kahncpa@kahncpa.com. We are here to help. |
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