Published in Last Word
The House of Representatives will consider legislation this week to make permanent a measure that incentivizes business investments in equipment.
As part of the stimulus legislation enacted in 2009, Congress agreed to allow firms to write off 50 percent of the cost of new equipment in the year it is purchased. This “bonus depreciation” provision has been extended several times, and most recently expired at the end of 2013.
Bonus depreciation differs from Section 179 expensing because only purchases of new equipment qualify for bonus depreciation, while used equipment also qualifies for Section 179. In addition, Section 179 expensing is currently limited to $25,000 in purchases. Bonus depreciation does not have a similar restriction.
Although the House has approved the permanent extension of several tax provisions, the Senate continues to focus on two-year tax extender legislation. Final agreement between the two chambers will likely not occur until after the November election.
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