**The 2008 Economic Stimulus Package---the Bottom Line for Your Small
Business**

The 2008 Economic Stimulus Package may help you reduce your tax bill in
two important ways!

**[First, expense up to \$250,000 in property purchased in your 2008 tax
year (the 179 Deduction) and save on your taxes]{.underline}**

-   For your 2008 [tax]{.underline} year, you may be able to expense up
    to \$250,000 for property. This almost doubles the previous limit of
    \$128,000, but is only available for [your 2008 tax
    year]{.underline}!

-   Property that often qualifies includes: machinery, refrigerators,
    grocery store counters, office equipment, printing presses,
    computers, off-the-shelf computer software, signs, gasoline storage
    tanks and pumps at retail service stations, a single purpose
    agricultural or horticultural structure, and livestock (horses,
    cattle, hogs, sheep, goats, and other furbearing animals). Most
    passenger automobiles and other property used for transportation are
    also eligible for 179 deductions. Also, the section 179 deduction
    for the cost of any sport utility vehicle with a gross vehicle
    weight of over 6,000 pounds and not more than 14,000 pounds is
    limited to \$25,000.

For example, if your tax year begins July 1, 2008, you can expense any
qualifying property purchased, and placed and kept in service during
your July 1, 2008, to June 30, 2009, tax year, up to \$250,000. Land,
buildings, and land improvements, such as swimming pools and paved
parking areas at retail stores, are [no]{.underline}t eligible. Please
note that there is a taxable income limitation on 179 expenses. You
cannot expense an item used in a business more than the taxable income
from that business.

**[Second, write it off faster with two deductions and save on your
taxes]{.underline}**

-   [First Deduction]{.underline}: For property acquired, placed and
    kept in service in calendar year 2008, you may be able to write-off
    50% of what you paid for it (a special depreciation allowance).

-   [Second Deduction]{.underline}: In addition to the 50% write-off,
    you can take a write-off of the normal first year depreciation on
    the remaining 50% of what you paid for the property.

-   Examples of eligible property include: off-the-shelf computer
    software, qualified leasehold improvement property, and tangible
    property with a recovery period of 20 years or less (which includes
    cell phones, tractor units for over-the-road use, computers,
    computer peripheral equipment, office furniture and fixtures, and
    farm buildings).

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-   For passenger automobiles, vans and trucks depreciation limits are
    increased by \$8,000 as follows:

    -   Depreciation limits for passenger automobiles go from \$2,960 to
        \$10,960.

    -   Depreciation limits for vans and trucks (with a gross vehicle
        weight of 6,000 pounds or less) go from \$3,160 to \$11,160.

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-   The original use of the property must begin with the taxpayer after
    December 31, 2007. In other words, the property must be "new"
    property.

For example, if you acquire, and place and keep in service property
during the current calendar year that costs \$350,000, you can deduct 50
percent of its cost, or \$175,000, in 2008 as a special depreciation
deduction. In addition, you can use the remaining \$175,000 to figure
your regular depreciation deduction.

Below is a table showing the net depreciation increase resulting from
the special depreciation included in the Economic Stimulus Act of 2008:

![](media/image1.png){width="7.5in" height="4.272222222222222in"}

This new legislation will not only benefit small businesses in a variety
of ways, but it will also provide an economic boost to the entire
nation. Because there are exceptions and additional requirements, please
contact your tax advisor to determine exactly how the provisions of the
Economic Stimulus Package of 2008 apply to your business. Also, you may
refer to the Internal Revenue Service website
([www.irs.gov](http://www.irs.gov/)) for additional information
regarding the tax changes resulting from the Economic Stimulus Package
of 2008.

Finally, the following IRS Press Release may prove useful:

-   Business Provisions of the Economic Stimulus Act of 2008
    <http://www.irs.gov/newsroom/article/0,,id=183867,00.html>

-   IRS To Issue Guidance on Special 50-Percent Depreciation Allowance
    <http://www.irs.gov/newsroom/article/0,,id=181364,00.html>

-   2008 Economic Stimulus Act Provides Tax Benefits to Businesses
    <http://www.irs.gov/newsroom/article/0,,id=179227,00.html>