Sec 179 for 2010

[dsi]

What's the sec 179 amount for 2010?

[dsi]

I found my answer:

"The Hiring Incentives to Restore Employment (HIRE) Act of 2010 extends the dates of the IRC Section 179 temporary increase in limitations on expensing of depreciable business assets.

Under HIRE, qualifying businesses can continue to expense up to $250,000 of section 179 property for the 2010 tax year. Without HIRE, the 2010 expensing limit for section 179 property would have been $125,000.

The $250,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000."

[Maribeth]

The bill that was just signed increases the amount to $500,000.

"President Obama this afternoon signed into law H.R. 5297, the Small Business Jobs and Credit Act, which allows businesses of all sizes to immediately write-off 50 percent of the cost of depreciable property purchased and placed in service anytime during 2010. This provision is a temporary extension of the bonus depreciation provision included in both the 2008 and 2009 economic stimulus laws. The new law also includes a provision that increases Section 179 expensing for two years by increasing the expense limitation to $500,000 with a phase-out threshold of $2 million for years 2010 and 2011." - "Shopfloor

Maribeth

[JohnH]

I sometimes wonder whether bonus depreciation really has any significant stimulative effect at all. First of all, who in their right mind buys equipment to get the tax write-off? A savy business person buys equipment because it enhances productivity or to replace aging equipment. The only thing bonus depreciation will do in most cases is cause one to buy equipment a little earlier than they would have otherwise. So at the most, it is simply accelerating the purchase into the current year, ultimately at the expense of next year's sales.

With many small businesses, the bonus depreciation can actually cost them more in the long run, especially if they are purchasing equipment in a low-income/low-tax-rate year. They get the deduction at a low rate (15% for example), and then miss out on using the deduction in a higer-rate year (25%-30%, etc). Even allowing for the time value of money, that math won't work. And the current economy fits that description for lots of my clients who are basically hanging on.

Furthermore, when bonus depreciation is taken in a low income year on an asset that is financed, the future years will produce "phantom income" as the principal repayments get out of sync with the depreciation write-offfs. I've had to explain that little accounting anomaly to more than one client who insisted that they wanted to "write off as much as possible" in the year of purchase without thinking through the implications. Maybe they're the suckers this sort of legislation is designed to fool.

Tax credits can certainly be an incentive because they directly affect the cost of equipment purchased, but does bonus/accelerated depreciation really have much of a stimulative effect, or is it just a "feel good" shell game the politicians are playing?

[Bees Knees]

A seminar I just attended had IRS employees as speakers, and one of them said that bonus depreciation is actually used by big businesses, since there is no phase-outs, like the Section 179 deduction. The idea is to get big businesses to spend more money.

[JohnH]

With all due respect to the IRS rep, I'd think the same principle would apply to big business, except more so. After all, they have people who are paid specifically to think these things through. It would seem to me that anyone analyzing an equipment purchase from any standpoint other than enhancing productivity would be a good candidate for a firing. The tax implications would be one of many factors, but the needs of the business are what should drive any equipment decision. And I'd think the tax implications would be the LAST item on the list in most cases.

[veritas]

Depends

What's the sec 179 amount for 2010?

What day of the week it is.