| As the calendar turns to another year, it's time to get | | | | Economic Stimulus Act of 2008 has two incentives for |
| 2008 tax information in order. Taking advantage of all | | | | business that purchase, tangible personal property, for |
| opportunities can reduce the burden. Here are some | | | | use in the business. The first enhancement Section 179 |
| opportunities, courtesy of the Internal Revenue Service, | | | | is expensing. |
| that are not widely known. If they don.t apply to your | | | | For property placed in use during the 2008 tax year, |
| 2008 returns, this is a good time to consider them for | | | | business can deduct up to $250,000. the deduction |
| the new year. In hiring, consider taking advantage of | | | | begins to phase out if the business spends more that |
| the Work Opportunity Tax Credit. | | | | $800,000. Before the Act, the Section 179 expense |
| This was designed to provide an incentive to hire from | | | | limit was up to $238,000, with a phase out beginning at |
| certain groups with particularly high unemployment | | | | $510,000. What property qualifies? Generally, the |
| rates, including urban youths, government assistance | | | | property must be newly purchased tangible personal |
| recipients, ex-convicts, veterans and vocational | | | | property, actively used in the business and for which a |
| rehabilitation referrals. The credit has been extended a | | | | depreciation deduction would be allowed. It must be |
| number of time. Now it's combined with the welfare to | | | | used more than 50 percent for business. |
| work tax credit and extended through August 31, 2001. | | | | Bonus depreciation is back, offering another incentive |
| The combined credit is available for employers hiring | | | | to purchase equipment. It is the second incentive in the |
| from one or more of nine targeted groups. Depending | | | | Economic Stimulus Act. This incentive was used after |
| on the group and circumstances, the maximum credit | | | | 9/11 and after the gulf cost hurricanes, to encourage |
| per employee ranges from $1,200 for qualified summer | | | | businesses to invest. The new law provides qualifying |
| youth employees to $5,000 for long term family | | | | taxpayers 50 percent first year bonus depreciation of |
| assistance recipients. If you own real estate, you might | | | | the adjusted basis of qualifying property. |
| benefit from cost segregation. | | | | To claim bonus depreciation, the assets must be new, |
| Real estate holdings represent a significant capital | | | | qualified property put into service after December 31, |
| investment. Cost segregation carves out shorter lived | | | | 2007. Qualified property must be: "Property with a |
| assets, which qualify for five, seven and 15 year write | | | | depreciation recovery period of 20 years or less." |
| off periods, normally embedded in a building's | | | | "Depreciable computer software that is not |
| construction or acquisition cost, and thus depreciated | | | | amortizable over 15 years." "Water utility property." |
| over 38 years. Reclassifying assets and accelerating | | | | "Qualified leasehold improvement property." If |
| depreciation could bring tax savings and easier write | | | | purchasing equipment isn't practical, there are tax |
| offs when items become obsolete. Reclassifying | | | | advantages to leasing. If you lease your equipment, |
| assets is most effective for property valued at $1 | | | | you are allowed a full write off of lease expenses |
| million or more. For retailers that are considering buying | | | | each year, no matter the size of your business or the |
| equipment, enhanced Section 179 may help. The | | | | dollar value of the leases. |