Bonus Depreciation

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Bonus Depreciation

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

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