New Law Extended Expensing of Property Costs Acquired by Business Taxpayers
On March 18, 2010, the newly enacted law – the Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847) - extended the $250,000 maximum first year expensing on property purchased by businesses from 2009 to 2010 (the so-called Sec. 179 expensing). For example, if a timber business purchased a machine that cost $400,000 in 2010, the new law allows the business taxpayer to deduct (expense) a maximum amount of $250,000 on their return provided other requirements of Sec. 179 are met. Without the extension by the HIRE Act, the maximum amount under Sec. 179 was $134,000 (Rev. Proc. 2009-50, October 15, 2009). The investment limit of $800,000 is also extended one more year, from 2009 to 2010. This means if you invested more than $800,000 of property in your business, the Sec. 179 deductions if qualified, is reduced by the amount over the $800,000. Thus an investment of property of $1,050,000 would effectively eliminated Sec. 179 expensing.