Small Business Bill Provides Incentives For Proprietors

Small business bill provides incentives for proprietors to make capital equipment purchases before the end of 2010.

The 2010 Small Business Jobs and Credit Act, recently enacted, provides valuable tax breaks for bowling center proprietors and creates incentives for community banks to lend to small businesses. Read more about why it could be the right time to speed up your capital improvement plan.

Now that the 2010 Small Business Jobs and Credit Act has been put into law, it’s a good time for proprietors to evaluate their capital improvement plan to see if it makes sense to take advantage of tax breaks such as a 50% write-off on equipment purchases before the end of 2010.

Here are the highlights of the legislation.

Enhanced small business expensing (Section 179 expensing). Bowling centers can quickly recover the cost of certain capital expenses by electing to write off the cost of these expenses in the year of acquisition instead of depreciating over time. Before the 2010 Small Business Jobs Act law, taxpayers could expense up to $250,000 of 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 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. Bowling centers 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).

Consult with your tax advisor today to see if the Small Business Jobs Act can help you.