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2003 Tax Act Set To Expire
Reminder:
The Section 179 deduction for qualifying depreciable
property is scheduled to sunset on December 31,
2004.
The
2003 Tax Act, in addition to tax benefits for
individuals, also provides additional tax incentives for
business owners to purchase capital assets (i.e.,
material handling equipment and related products) for
their businesses.
The
Tax Act increased the amount of the Section 179
deduction for qualifying depreciable property (capital
items that are related to managing or running the
business) for calendar years 2003 through 2005 to
$100,000 (as opposed to the previous amount of $25,000).
This deduction cannot exceed the business's net income,
and is reduced dollar-for-dollar to the extent that the
amount of qualifying property placed in service during
the calendar year exceeds $400,000.
Additionally,
the 2003 Tax Act raised the first-year bonus
depreciation rate on new business assets from 30% to
50%. This change applies to property placed in service
after May 5, 2003, and before 2005. Fifty percent of the
cost of qualifying property is deductible in the year
the item was purchased and placed into service. This is
in addition to the regular depreciation allowed for the
rest of the cost.
Both
of these items serve as incentives to help smaller
businesses minimize their income for tax reporting
purposes by purchasing capital assets and taking
advantage of the changes in the tax law.
Feel
free to use this information as a prospective selling
tool. As always, you should check with your tax experts
or advisors for clarification as to your own individual
taxation situation and further information regarding the
2003 Tax Act. | 
