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August 15, 2011
Manufacturers: Take Advantage of Bonus Depreciation Incentives “Before They’re Gone”.
When the economy hit the skids in 2008, Congress significantly expanded two first-year depreciation deductions as an incentive to businesses. The goal was to induce spending on capital equipment and some categories of real estate improvements by allowing considerably improved first-year deductions. But there’s not much time left to take advantage—these perks start shrinking in 2012, and it doesn’t appear they’ll be renewed.
“Capital equipment purchases should always be driven by the needs of the business versus the tax benefit. However, if needed, these first-year depreciation incentives have worked well for our clients,” says Marni Spence, manufacturing and distribution tax principal with LarsonAllen. “They came at a time of increased production for some manufacturers and were helpful in sheltering the additional income. But as these incentives wind down, what’s left will look small by comparison.
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