American Recovery and Reinvestment Act (ARRA) Highlights

Depreciation Bonus At A Glance

  • Sec. 1201 of the 2009 American Recovery and Reinvestment Act (ARRA) allows additional first-year depreciation of 50 percent of equipment's cost
  • Depreciation bonus helps businesses that buy equipment this year cut their 2009 tax bill
  • Applies, among other things, to purchases of tangible personal property (including construction, mining, forestry, and agricultural equipment) with a MACRS recovery period of 20 years or less
  • Equipment must be purchased and placed in service in 2009
  • Equipment must be new
  • Depreciation bonus will expire at end of 2009

Sec. 179 Expensing At A Glance

  • Sec. 1202 of the ARRA extended for one year the increased Sec. 179 expensing limit of $250,000 and phase-out cap to $800,000
  • Companies can expense up to $250,000 in purchases as long as they don't spend more than $800,000
  • Expensing is phased-out for each dollar that purchases exceed $800,000
  • Companies with total purchases of $1,050,000 cannot use Sec. 179
  • New and used equipment is eligible for expensing
  • Applies to tax years that start in 2009
  • Can be combined with depreciation bonus
  • Sec. 179 expensing levels will drop at end of 2009 (without ARRA, the 2009 expensing amount would be around $130,000 and the phase-out level would be around $500,000)

Source:  http://www.depreciationbonus.org/