The IRS is Helping You Sell More Equipment!

Selling equipment can be difficult, especially in slow economic times. However, in light of the September 11th tragedy, the IRS decided to give business owners a new tax incentive to buy equipment.

To stimulate purchases, Congress passed a law in March 2002 that brings one of the business community’s most sought after tax incentive - a 30% depreciation “bonus”. If your business purchased new assets after Sept. 10, 2001 and before Sept. 11, 2004, we have good news!

It’s retroactive to Sept. 10, 2001 and you can still take the $24,000 Section 179 “instant write-off”. So on a $100,000 equipment lease or purchase you can take these write-offs:

Depreciation Bonus: $30,000
Section 179 Write-Off: $24,000
First Year Write-Off: $54,000

Note that qualifying equipment must be new, have depreciable lives of 20 years or less, and some leasehold improvements costs are eligible. Software, which normally must be depreciated over 3 years, is also fair game for the first year write-off.

Another Positive aspect of the legislation is relief provided by extending the carry back period for a net operating loss (NOL). Prior to the change, you could only go back 2 years to pick up a tax saving NOL. Now you can go back 5 years for NOL’s arising in tax years ending 2001 or 2002. Plan accordingly.

Ask your CPA or bookkeeper how this change can help your business!

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