Combining tax incentives with business and inventory optimization systems, companies are provided a rare and short-lived opportunity to boost after-tax profits while reinvesting and growing their businesses in three steps: Depreciation, Optimization and Investment. These incentives expire at the end of this year, so don't wait any longer!
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Here’s a brief overview of the tax discussion in the webinar:
Business Tax Provision of “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” includes provisions that:
- Extend for two years current individual income tax rates
- Extend bonus depreciation and section 179 expensing
- Provide temporary changes in wealth transfer taxes
- Provide temporary employee payroll tax cut
- Extend current tax rates on capital gains and dividends
The additional first year depreciation deduction that has been allowed for investment in “qualified property” for 2008 through 2010 is extended through 2012
- Available for qualified property* acquired and placed in service on or after January 1, 2008 and before January 1, 2013
- 100 percent deduction is allowed for qualified property
- 50 percent first year deduction for qualified property
- Off the shelf software
- Implementation costs
- Training costs
A taxpayer may elect to treat the cost of any section 179 property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service.
- Property may be expensed under Code Sec. 179 whether bought new or used. By contrast, property is eligible for the new 100% first-year write-off only if it is new.
- Dollar Limitation: the aggregate cost which may be taken into account for any taxable year shall not exceed–
- $250,000 in the case of taxable years beginning after 2007 and before 2010,
- $500,000 in the case of taxable years beginning in 2010 or 2011, and
- $125,000 in the case of taxable years beginning in 2012
- $25,000 in the case of taxable years beginning after 2012
- Reduction in Limitation: the limitation for any taxable year shall be reduced (but not below zero) by the amount by which the cost of Sec. 179 property placed in service during such taxable year exceeds–
- $2,000,000 in the case of taxable years beginning in 2010 or 2011,
- $500,000 in the case of taxable years beginning in 2012, and
- $200,000 in the case of taxable years beginning after 2012
- Equipment (machines) purchased for business use
- Tangible personal property used in business
- Computer software (“off-the-shelf” software)
- Office furniture/equipment
- Property attached to your building that is not a structural component of building (ie., printing press)
- Partial business use (equipment that is purchased for business and personal use – generally, deduction will be based on the percentage of time your use the equipment for business purposes)
THIS INFORMATION WAS COPIED WITH PERSMISSION FROM THE WEBINAR SLIDES PREPARED BY KPMG. ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.