Maximizing Current-Year Deductions on Investments in Business Assets

Taking Advantage of Recent Tax Acts

Michael Chiasson, DBA, and Linda Nelsestuen, PhD, CPA, CMA

In an effort to increase capital spending by businesses, the Small Business Jobs Act (SBJA) of 2010 expanded tax incentives that allow taxpayers to write off a significant amount of the assets placed into service in the current year. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRA) further expanded the tax breaks on investments in business assets. Due to these two acts, the IRC section 179 deduction has been expanded to $500,000 and now includes certain real estate, and the IRC section 168(k) depreciation bonus has been extended through the 2012 tax year. An examination of the intricacies of the tax acts reveals how taxpayers can maximize the tax benefits of each, as well as through the interaction of both statutes.