.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} tr.d0 td { background-color: #ccccff; color: black; }
Individual taxpayers won’t be the only ones to benefit from the Economic Stimulus Act of 2008. In addition to providing rebate checks to individual taxpayers this spring, the $168 billion tax break legislation signed by President Bush on Feb. 14 also will enable businesses to save on their taxes by investing in additional capital. Small and mid-sized businesses making qualified purchases of new equipment this year will receive a 50 percent depreciation allowance.

Additionally, businesses with up to $800,000 in equipment investments will be able to write off $250,000 of those expenses immediately this tax year, with that expensing limit phasing out dollar for dollar for purchases above $800,000. That $250,000 limit is nearly double the amount of “Section 179” property they would otherwise have been able to expense in one year.

The accelerated expensing provisions “will provide cash flow and could help speed up the timing of potential acquisitions of fixed assets,” said Chris Anderson, a tax partner with McGladrey & Pullen LLP’s Des Moines office.

“I think this will assist them if they are on the fence of deciding whether to do an expansion or significant capital expenditure or not,” he said. Start-up companies are less likely to be aware of the new law or be in a position to benefit from it, said Mike Upah, associate director of the John Pappajohn Entrepreneurial Development Center at Iowa State University.

“The smallest businesses are buying things because what they have broke,” he said. “I think when you get into mid-size businesses is when you get into more of a planning mode.”

Congress last authorized a bonus depreciation provision in 2001, and had extended it through the end of 2004.

Under the new bonus depreciation just enacted, a business making a $100,000 qualifying purchase of equipment with a five-year depreciable life could deduct up to $60,000 of the cost this tax year (50 percent of the cost plus one year of depreciation of the remainder), and then continue depreciating the remainder over the original depreciable life.

Still unknown is how the Iowa Legislature will treat bonus depreciation allowances on businesses’ 2008 state income taxes, Anderson said.

The Legislature did not enact the 30 percent bonus depreciation when Congress previously approved a stimulus act in late 2001, but did authorize a subsequent 50 percent bonus depreciation allowance.

Two bills now under consideration, including legislation that would exempt the income from federal rebate checks from state taxes, each have amendments proposed to change the effective date so that the depreciation provisions will be included.

Peder Malchow, president of LBC Technology Inc. in West Des Moines, said he believes the tax breaks will provide opportunities for both his business and his clients to invest in new technology. His computer help-desk company operates the Edge Business Continuity Center, a data and disaster-recovery center in Altoona.

“If there’s a small business with a server they’ve had three or four years or they have put off buying some security devices, now would be the time to consider that,” he said. “And of course, I would be able to sell it to them and install it, so it would be a win-win. It makes the sales process a little bit easier.”