Most of the benefits that you will see from the Government’s Economic Stimulus Package will come in the form of tax cuts. The government view is to have you spend money to improve your company infrastructure and hopefully your bottom line. That way they can get more taxes from you with your new and improved performance. Here are some of the benefits you can gain this year by spending some money on your company for those improvements that you have been holding back on.
Equipment Expensing and Valuing. Purchasing computers, machinery, and off the shelf software may result in substantial write-offs.
A provision buried within the Obama administration’s nearly $800 billion stimulus package will
extend a piece of the earlier Bush administration plan designed to aid small businesses that
purchase new equipment.
Section 1201 of the 2009 American Recovery and Reinvestment Act (ARRA) allows additional
first-year depreciation of 50% of the purchase cost of new equipment by extending for one year
Section 179 of the 2008 Economic Stimulus Act.
Last year, finance experts applauded the provision, saying Section 179 had led to increased
sales among equipment manufacturers as customers reaped the benefits of the new tax
deduction.
Like the original provision, businesses can write off twice as much equipment acquisition costs as
an expense rather than depreciating the purchase over several years, with qualification extending
to almost all tangible personal property. If the company exceeds the $250,000 cap, the law
features a provisional depreciation bonus that lets it write off up to half of the purchase in the first
year, on top of the regular depreciation allowance.
A laundry list of state-sponsored opportunities, many boosted by the ARRA, can be found at www.business.gov. Included on the site is state or industry specific information pertaining to the R&D, training and implementation incentives outline in the ARRA.
The thing to remember is that the government is providing the incentive to purchase the products that will enhance your company’s ability to support your clients better. Make the changes you have been hesitating on and advantage of these extra tax benefits while doing so. As always, talk to you tax advisor to make sure you qualify and determine the best way you can take advantage of these tax savings.
Thursday, November 12, 2009 at 7:21AM 
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