e-YWM Alert #15 - 100% Writeoff for Heavy SUVs Used Entirely for Business

Although generous tax breaks for gas-consuming heavy SUVs have in the past raised the ire of Congress, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act) actually made tax breaks for these assets even more generous. Taxpayers that buy a new heavy SUV after September 8, 2010 and before 2012 and use it entirely for business can write off the entire purchase price in the placed-in-service year. For the purposes of these laws a heavy SUV is defined as a vehicle with an unloaded vehicle weight of 6,000 pounds or more. A partial list of the vehicles that would qualify as a heavy SUV can be found herehttp://www.alphaleasing.com. Now 100% first-year writeoffs for heavy SUVs. Under the 2010 Tax Relief Act, the bonus first-year depreciation percentage is 100% (instead of 50%) for bonus-depreciation-eligible "qualified property" that is generally: (1) placed in service after Sept. 8, 2010 and before Jan. 1, 2012, and (2) acquired by the taxpayer after Sept. 8, 2010 and before Jan. 1, 2012. Thus, a taxpayer that buys and places in service a new heavy SUV after Sept. 8, 2010 and before Jan. 1, 2012, and uses it 100% for business, may write off its entire cost in the placed-in-service year. Do you use your vehicle 100% for business? You need to watch commuting and other personal use. Please contact us before using this tax strategy to make sure your qualify.

All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020 or reply directly to this email. Additional resources are always available at our website, www.ywmcpa.com.

e-YWM ALERT #3-Small Business Act-Depreciation Provisions

The recently enacted Small Business Jobs Act of 2010 includes a wide-ranging assortment of tax changes generally affecting business. Two of the most significant changes allow for faster cost recovery of business property. Here are the details.

Enhanced small business expensing (Section 179 expensing). In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Under pre-2010 Small Business Act law, taxpayers could expense up to $250,000 for qualifying property-generally, machinery, equipment and certain software-placed in service in tax years beginning in 2010. This annual expensing limit was reduced (but not below zero) by the amount by which the cost of qualifying property placed in service in tax years beginning in 2010 exceeded $800,000 (the investment ceiling). Under the new law, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment ceiling to $2,000,000.
The new law also makes certain real property eligible for expensing. For property placed in service in any tax year beginning in 2010 or 2011, the up-to-$500,000 of property that can be expensed can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property).

Extension of 50% bonus first-year depreciation. Businesses are allowed to deduct the cost of capital expenditures over time according to depreciation schedules. In previous legislation, Congress allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property, and certain other new property, placed in service in 2008 or 2009 (2010 for certain property), by permitting the first-year write-off of 50% of the cost. The new law extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (2011 for certain property).

All information presented above is generic, if you would like to know how this affects your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.

This service is being provided exclusively to YWM clients and firm friends.