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Struggling in ’08? Turn down bonus depreciation

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in Small Business Tax,Small Business Tax Deduction Strategies

The economic stimulus law enacted in February creates a tax incentive to buy business equipment this year. Under the new law, your business can claim “bonus depreciation” for qualified new (not used) business assets placed in service before 2009.

But you may not derive any tax benefit from year-end purchases if you expect a loss this year. Due to the economic slowdown, many other businesses are in the same boat.

Strategy: Buy the equipment you need before Jan. 1. Then, if your business is a corporation, elect to forgo the bonus depreciation tax break on your corporation’s 2008 return.

By taking this approach, you can treat unused alternative minimum tax (AMT) credits and research credits as being refundable. The switch gives your business a quick infusion of cash.

The new federal housing law signed in July authorizes this special election.

Here’s the whole story: Similar to a prior tax break designed to spur business s...(register to read more)

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