The Tax Relief Bill, which was passed by congress and signed by President Obama this past December, contains one provision which lawmakers hope will encourage investment and lead to more hiring in 2011. The provision, commonly referred to as bonus depreciation, allows business owners to write off 100% of qualified investments in their first year of life if they were purchased and put to use after September 8, 2010 and before January 1, 2012. For equipment bought and put to use between January 1, 2012 and December 31, 2012, bonus depreciation is still available, but is reduced to 50%. Also, the 50% bonus depreciation is available for purchases made between January 1, 2010 and September 7, 2010, due to the Small Business Jobs Act of 2010.
To qualify for the 100% bonus depreciation, the equipment purchased must be new, not used, and have a MACRS recovery period of 20 years or less. Taxpayers are not required to claim the depreciation bonus.
We will keep you posted on any changes or updates.