I M P O R T A N T T A X A L E R T
Here’s how this new tax provision works for a
Let’s assume that ABC Custom Metal Fabricators, Inc. retools their facility in 2011 with NEW equipment totaling $800,000. Under the new law, ABC can write off 100% -- all of the $800,000 -- of the value of the asset in the first year, saving over $ 280,000 in federal and state corporate income taxes, or possibly more for subchapter S corporations depending upon the federal personal tax brackets and state personal income tax rates applicable to the S corporation shareholder/owners. Consult your tax adviser for specifics. In addition, there are new rules applicable to the purchase of used equipment – please consult you tax advisor to see if these benefits may apply to your situation or your project.
Note: The new equipment must be installed prior to December 31, 2011 to qualify for the 100% Bonus Depreciation. Bonus Depreciation on new equipment purchases drops to 50% for 2012.
PS: If the 100% Bonus Depreciation on new equipment in 2011 causes a Net Operating Loss for your corporation in 2011 this loss can be carried back two years