Small Business Administration: Stimulus Act adds depreciation provisions for businesses

Did you know your business may be able to benefit from the same 2008 Economic Stimulus Act legislation that brought you an individual check from the IRS – if the business bought certain property?

Case in point

Here’s what John Berger, an IRS small-business planning and support specialist in Baltimore, told me in a recent e-mail about the 2008 Economic Stimulus Act’s provisions.

“The Economic Stimulus Act of 2008 increased the maximum amount for depreciation for businesses under Section 179 of the federal tax code from $128,000 to $250,000 for 2008.

“The Economic Stimulus Act of 2008 also raised the Section 179 phase-out limit, formerly $510,000 for this year, to $800,000. Section 179 depreciation provides a way for businesses to recover quickly some of the costs of certain property purchases, such as equipment.

“The law also reinstates 50 percent special depreciation, also known as bonus depreciation, for much of the country (though rules vary by state). This special depreciation entitles taxpayers to depreciate 50 percent of the cost or other basis during the year for an asset placed into service in 2008 and depreciates the remaining cost or basis over the asset’s normal life.”

Resources

Berger said the Economic Stimulus Payments Information Center at www.irs.gov, is the best source of economic stimulus information from the IRS, and he notes that as guidance is issued, the Web site will be updated.

Be advised of your possible savings and be sure to check with business tax advisers on how best to use the 2008 Economic Stimulus Act to your advantage.

Sam Jones is the Region VII SBA Administrator, serving Missouri, Kansas, Iowa and Nebraska.