Improving business conditions aren’t the only reason forward-thinking companies are making new capital investments this year. Congress and the president have enacted temporary tax laws to encourage companies to buy now. The incentives created in December 2010 are the most significant in a generation. If your company purchases equipment in 2011, you can dramatically reduce what you send to Uncle Sam this year.

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRJA) extended and expanded the depreciation bonus created in 2008. For 2011, it’s an unprecedented 100 percent; for 2012, it’s 50 percent. By lowering your taxable income, bonus depreciation can significantly cut your 2011 and 2012 federal tax bills, freeing up cash in the near term.

Assume you buy and place in service in 2011 a new piece of equipment costing $100,000. Using bonus depreciation, you can “write off” the full amount this year, reducing your taxable income by $100,000. If you’re in the 35 percent tax bracket, that can reduce your 2011 tax bill by $35,000.

There are some important nuances to keep in mind:

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From a tax standpoint, there’s never been a better time to invest in your company’s future. Of course, this article doesn’t constitute specific tax or legal advice, so be sure to check with your accountant or tax professional if you want to take advantage of the law.

But don’t wait … the clock is ticking!

Contact: Stan Ragley
Phone: 888.685.1430
Cell: 704.641.2587
Fax: 888.685.1416
stan.ragley@biesseamerica.com