The American Recover and Reinvestment Act of 2009
To better understand, let’s say you are a mobile DJ contemplating the purchase of a new video system, looking for the opportunity to capture an untapped market -- video.
The American Recover and Reinvestment Act of 2009 allows a small business owner (you) the opportunity to fully depreciate the expense of new equipment in the year in which it is purchased, up to a maximum amount of $250,000.00.
This accounting method, for tax purposes, is better known as “Section 179 Expensing.” Under Section 179 Expensing equipment and off-the-shelf software may be immediately expensed (deducted) in the same year as the asset was placed in service, rather than recovered over time, as with an alternate accounting method known as depreciation.
This “rapid” depreciation can help lower your adjusted gross income immediately, help you qualify for other various deductions and ultimately reduce your tax liability – that’s less of your money going to Uncle Sam. And that’s a good thing.
Best of all that extra money in your pocket will allow you to hook-up with new gear, software or even an extra CD or DVD subscription and claim another deduction next year.
