As most are aware, the U.S. Senate and the House approved the American Taxpayer Relief Act of 2012 (Act) on January 1, 2013, averting the “Fiscal Cliff,” which received much media attention (nothing like waiting to the last minute!). Two items in the Act, the extension of both Code Sec. 179, Small Business Expenses and Bonus depreciation, are of special interest to the trucking industry regarding the purchase of equipment.
Code Sec. 179 allows for the immediate expensing of certain eligible capital purchases. Without the Act, the dollar limit for tax years beginning in 2012 would have been $125,000 with a $500,000 investment limit, and in tax years after 2012, the dollar limit would have been $25,000 with a $200,000 investment limit. Under the Act, the dollar limit and investment limit for 2012 and 2013 are now $500,000 and $2,000,000, respectively.
Bonus depreciation allows for the immediate expensing of eligible capital purchases. For the 2011 and 2012 tax years, the allowable bonus depreciation permitted was 100% and 50%, respectively. Without the Act, bonus depreciation would have expired. The Act is extending the 50% bonus depreciation through 2013.
Certain transportation companies may also benefit from the extension of the alternative fuel vehicle refueling property and the biodiesel and renewable diesel credits extended through 2013 by the Act.
Another item of potential interest to individual taxpayers is the permanent Alternative Minimum Tax (AMT) “patch.” The Act makes permanent the exemption, allowing for subsequent increases in future years, and also allowing nonrefundable personal credits to the full amount of the individual’s regular tax and AMT. There are numerous provisions and extensions in addition to the few described above. For more information on the aforementioned items and a summary of the Act, please read our full analysis.
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