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Capital Expenditures: Is Now the Time?

Posted 5:44 PM by

Is your manufacturing or distribution company considering additional capital expenditures for equipment or other improvements? If yes, don't forget about laws passed in 2010 that may offer significant tax benefits through the use of Section 179 expensing and bonus depreciation. 

For tax years beginning in 2011 and 2010, Section 179 provides for immediate expensing of qualifying equipment of up to $500,000 (dollar for dollar phase out for expenditures in excess of $2,000,000). Section 179 is scheduled to drop to $125,000 (dollar for dollar phase out for expenditures in excess of $500,000) in 2012.

For purchases of qualifying equipment after September 8, 2010, and through December 31, 2011, 100% depreciation is available. Bonus depreciation is scheduled to drop to 50% in 2012.

Various factors should be considered when determining whether to take advantage of these benefits, including the various details of the laws, current and future profitability of your company and other exceptions and limitations.

About the Author
Jason Patch is a partner in Katz, Sapper & Miller’s Audit and Assurance Services Group and leads the firm’s Manufacturing and Distribution Services Group. Jason works with clients to ensure accurate financial reporting, keeping an eye on their bottom line, helping them avoid risk, and maximizing efficiencies. Connect with him on LinkedIn.

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