2011 Business Tax Considerations

Bonus Depreciation: Businesses can use bonus depreciation to immediately write off a percentage of the cost of depreciable property. The Tax Relief Act of 2010 makes 100 percent bonus depreciation available for qualified acquisitions made after September 8, 2010 and before January 1, 2012. It also continues bonus depreciation, albeit at 50 percent, on property placed in service after December 31, 2011 and before January 1, 20l3. There are special rules for certain longer-lived and transportation property. Additionally, certain taxpayers may claim refundable credits in lieu of bonus depreciation. 100 percent bonus depreciation is a valuable tax break, and businesses have only a short window to take advantage of it. Please contact our office so we can help you plan for 100 percent bonus depreciation.

Code Sec. 179 Expensing: Along with bonus depreciation, the Tax Relief Act of 2010 also provides for enhanced Code Sec. 179 expensing for tax years beginning in 2012. The Tax Relief Act of 2010 provides for a $125,000 dollar limit (indexed for inflation) and a $500,000 investment limit (indexed for inflation) for tax years beginning in 2012 (but not after).

Leasehold Improvements: The Tax Relief Act of 2010 allows affected taxpayers an additional two years to take advantage of the reduced recovery period for qualified restaurant property, leasehold improvement property, and retail improvement property.

Research Credit: Congress extended the research tax credit for two years, for 2010 and 2011.

More Incentives: Other valuable business incentives in the Tax Relief Act of 2010 include extensions of the following:

• 100 percent exclusion of gain from qualified small business stock
• Transit benefits parity
• Work Opportunity Tax Credit (with modifications)
• New Markets Tax Credit (with modifications)
• Differential wage credit
• Brownfields remediation
• Active financing exception/look-through treatment for CFCs
• Tax incentives for empowerment zones
• Special rules for charitable deductions by corporations and other businesses