For several years now we have had the ability to expense purchases of company capital assets that typically can not be expensed and must be capitalized and depreciated over their useful lives. Thanks to a tax code provision under Section 179. Under the Small Business Jobs Act (SBJA) of 2010, an increase to the limits of Section 179 were made available for 2010 and 2011. The limit is now raised from $250,000 to $500,000 for 2010. This can be a real tax savings if you invested in qualified property and you have taxable income in your business.
This tax law was designed to encourage the purchases of capital goods in the hopes of stimulating the economy. The reward for businesses that are motivated to make big ticket capital purchases is the possibility to expense the purchase and reduce taxable income.
This is a fairly simple alternative treatment of a capital asset that is within the tax code yet, a little planning could be in order. For example, If you have very little taxable income this year but plan on having increased taxable income in years to come. In cases such as these it's possible that depreciation may work better over the long term. This goes to show, planning the timing of capital purchases can be a very worthy effort.
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