Expensing and Bonus Depreciation Extended Again

President Obama has signed into law the Small Business Jobs and Credit Act, extending once again enhancecd Section 179 expensing and 50% bonus depreciation.

 The legislation also continues the enhancement of popular Small Business Administration (SBA) 7(a) and 504 loan programs, extends expiring loan guarantees and borrower fee reductions, and provides a new $30 billion fund for smaller banks to lend to small businesses.

NPES urged enactment of the new law that extends 50 first-year bonus depreciation, retroactive to January 1, 2010 for equipment placed-in-service by December 31, 2010. IRC Section 179 expensing is also extended for tax years beginning in 2010 and 2011, and the amount taxpayers can write-off in the first year is increased from $250,000 to $500,000, with the phase-out threshold from moving up from $800,000 to $2 million.

White House economists estimate that about 1.5 million companies stand ready to have their taxes lowered by utilizing these incentives and making capital investments now. In commending Congress and the President for enacting this legislation, NPES President Ralph Nappi stated that “history shows that accelerating capital cost recovery provides the leverage that brings forward needed investment in plant and equipment, which in turn generates increased economic activity and jobs.”

Even more necessary

Ironically, this may be even more necessary than in the past in order to counteract tax increases on dividends, capital gains and the two top tax brackets endorsed by the Obama Administration.

A Tax Calculator showing how the new expensing rules and continued bonus depreciation can make purchasing printing, publishing and converting technology much more affordable can be found at http://www.npes.org/tax_calculator.asp

 SBA 7(a) loans are the most flexible, designed for start-up and existing small businesses, and are delivered through commercial lending institutions. SBA 504 loans provide long-term, fixed-rate financing to acquire fixed assets (such as real estate or equipment) for expansion or modernization. The new law permanently increases 7(a) loans from $2 million to $5 million, and 504 loans from $1.5 million to $5.5 million.

The SBA has stated that these proposals will help alleviate the “lending gap” that exists between creditworthy small businesses and the financing that banks are currently making available through conventional loans.

Joining in support

NPES and over forty other trade associations that comprise the Small Business Access to Credit Coalition supported these increases. NPES President Ralph Nappi also underscored the importance of this aspect of the new law emphasizing that improved access to credit has been a top NPES government affairs priority.

Unfortunately, amendments to the legislation that would have repealed the recently enacted mandate that businesses issue IRS 1099 Forms to all vendors that provide them with $600 or more in goods or services in a year failed. But efforts continue to repeal this onerous reporting requirement before it goes into effect in 2012.

NPES has joined numerous other business organizations in vigorously opposing the new mandate, and believes that it should be totally repealed, not just legislatively modified or mitigated administratively.

For more information contact NPES Government Affairs Director Mark J. Nuzzaco at 703-264-7235, or e-mail: mnuzzaco@npes.org

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