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Bonus Depreciation
 

Bonus Depreciation

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    Bonus Depreciation Bonus Depreciation Presentation Transcript

    • Bonus Depreciation
      New Provisions for 2010/2011
      Presented by: Sarah Denton, CPAsarahdenton@decosimo.com
    • Bonus Depreciation Requirements
      Property Type
      Original Use
      Placed in Service Date
      Acquisition Date
    • Property Type
      Property with MACRS life of 20 years or less
      Computer software
      Qualified leasehold improvements
      Water utility property
    • Original Use
      Original use of property must begin with the taxpayer – NO USED PROPERTY
      Original use must begin after:
      12/31/2007 for 50% bonus
      9/8/2010 for 100% bonus
    • Placed In Service Dates:
      Property must be placed in service:
      between 1/1/08 and 12/31/12 to qualify for
      50% bonus
      between 9/9/2010 and 12/31/2011 for 100% bonus
      with some exceptions – written binding contract for purchase cannot be in effect before earliest date
    • Self-constructed Property
      Either “manufactured, constructed, or produced” by the taxpayer for their own use or,
      “manufactured, constructed or produced for the taxpayer by another person under a written binding contract”
    • Acquisition date for self-constructed property:
      Physical work of a significant nature begins
      Safe Harbor
      Significant physical work begins
      Accrual basis – when 10% of total cost of property is incurred
      Cash basis – when 10% of total cost of property is paid
      this doesn’t include cost of land or preliminary activities such as planning, designing or researching
    • Considerations:
      Other tax attributes may be affected by claiming bonus depreciation
      DPAD
      Foreign tax credits, state credits and general business credits
      State Considerations:
      Many disallow bonus – Tennessee for example
      Loss of state NOLs
    • Small Business Health Care Credit
    • Overview:
      Available to small employers that provide health insurance coverage to employees
      Includes taxable employers and 501(c)(3) organizations
      2010 – maximum credit is:
      35% of premiums paid for taxable employers
      25% of premiums paid for tax-exempt employers
    • Eligible Businesses:
      Fewer than 25 full-time equivalent employees (FTEs)
      Owners and partners generally don’t count
      Employees must earn an average of less than $50,000 per FTE
      Employer must maintain a “qualifying arrangement” for health insurance coverage
    • Qualifying Arrangement:
      Employer pays premiums for each employee enrolled in health care coverage
      Amount paid for employees must be a uniform percentage (not less than 50%)
      Includes:
      medical care – long term care, nursing home care
      HMOs
      Dental or vision plans
    • Premiums Included:
      Lesser of:
      Actual premiums paid by employer or,
      Average premium calculated by the Department of Health and Human Services for the small group market in each state.
      TN - $4,611, $10,369
      GA - $4,612, $10,548
    • Credit:
      Gradual Phase Out:
      FTEs exceed 10
      Average Annual Wages exceed $25,000
      Transition Relief:
      Employers who pay 50% of premiums for single coverage will meet the uniformity requirement regardless of whether they pay the same percentage for each employee