Stimulation Plan Impacts Your Business

Authored by David Scott Peters

As a restaurant expert and trainer, I know a TON about the restaurant business and how to make it work for you and other independent restaurant owners like you. But I’m not a tax expert. My good friend and accountant, Tonetta Weaver, is kind enough to keep some of us up to date on newsworthy information from the IRS. I thought this was a good bit of information and wanted to pass it along to you.

From the IRS Newswire…

2008 Economic Stimulus Act Provides Tax Benefits to Businesses

50-Percent Special Depreciation Allowance

Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property over several years. It is an annual allowance for the wear and tear, deterioration or obsolescence of the property.

Under the new law, a taxpayer is entitled to depreciate 50 percent of the adjusted basis of certain qualified property during the year that the property is placed in service. This is similar to the special depreciation allowance was previously available for certain property placed in service generally before Jan. 1, 2005, often referred to as “bonus depreciation.” To qualify for the 50 percent special depreciation allowance under the new law, the property must be placed in service after Dec. 31, 2007, but generally before Jan. 1, 2009.

To reflect the new 50-percent special depreciation allowance, the IRS is developing a new version of the depreciation and amortization form for fiscal year filers. The new form will be designated as the 2007 Form 4562-FY.

Section 179 Expensing

In general, a qualifying taxpayer can elect to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property, after the relevant section in the Internal Revenue Code.

Under the new law, a qualifying business can expense up to $250,000 of section 179 property purchased by the taxpayer in a tax year beginning in 2008. Absent this legislation, the 2008 expensing limit for section 179 property would have been $128,000. The $250,000 amount provided under the new law is reduced if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000.

The new law does not alter the section 179 limitation imposed on sport utility vehicles, which have an expense limit of $25,000.

Remember to keep smiling,

David Scott Peters

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David Scott Peters is the founder of Smile Button Enterprises, LLC, an independent restaurant coaching and training company, and is known as the SMART Systems guy who can walk into any restaurant in the United Stated and find you $10,000 in undiscovered cash before he hits the back door… Guaranteed! Visit www.smilebutton.com to learn more.