Depreciation Update

Dealers and contractors alike can benefit from President Bush’s Job Creation and Worker Assistance Act of 2002, which allows businesses to write off more of their equipment purchases in the first year with an additional first-year depreciation deduction.

Contractors who purchase large quantities of equipment can recover their costs more quickly, and dealers potentially can sell more products to their customers since the Act relieves investment burdens.

Business owners can deduct 30 percent of equipment costs for items purchased after Sept. 10, 2001. An increased dollar limit on the section 179 deduction allows companies with up to $200,000 in new investments to write off $24,000. For example, an owner who purchases $100,000 in equipment and chooses not to claim a 179 deduction can deduct 30 percent of the cost – $30,000 – and figure the depreciation deduction based on the remaining $70,000.

For those who elect to claim the 179 deduction, they can deduct $24,000 from the $100,000 purchase, figure the 30-percent deduction from the remaining $76,000 and then figure the depreciation deduction based on $53,200.
Contact your tax advisor for more information or further questions.

The author is Managing Editor – Special Projects for Lawn & Landscape magazine and can be reached at khampshire@lawnandlandscape.com.