Extended through 2019
A compliment to Section 179 depreciation, bonus
depreciation allows small businesses to deduct even
more of their investments in qualified capital improvements. After reaching the $500,000 cap on deductions
under Section 179, 50% of remaining amounts up to $2
million can also be deducted as depreciation.
Now, returning to Crest Capitol’s online calculator,
say you invested $600,000 on new fuel tanks across
a chain of stores. You could use Section 179 to deduct
depreciation on the first $500,000, then deduct half
of the remainder or $50,000 as bonus depreciation.
Add in the normal first-year depreciation of $10,000
and you end up with a deduction of $560,000 and,
based on a 35% tax rate, a cash savings on your
purchase of $196,000. So that $600,000 investment
would only cost $404,000.
Bonus depreciation also was a component of the
Economic Stimulus Act of 2008. It was temporarily
increased to 100% as part of the Tax Relief Act of
2010, but it was eliminated in 2011 before being
reinstated last year.
Though extended through 2019, bonus depreciation faces an uncertain future. The deduction already
is slated to decline from the current 50% for equipment put in service during 2015, 2016 and 2017, to
40% in 2018, and 30% in 2019. If it is not extended,
the program will expire completely in 2020.
INFRASTRUCTURE TAX CREDIT
Extended through December 2016
The Alternative Fuel Infrastructure Tax Credit
was put in place to help businesses pay for
making the shift toward alternative fuels. The
omnibus spending bill extended until the end
of this year a 30% tax credit—not to exceed
$30,000—for fueling equipment for natural gas,
liquefied petroleum gas (propane), liquefied
hydrogen, electricity, E85 or diesel fuel blends
containing a minimum of 20% biodiesel. The tax
credit doesn’t cover permitting or inspection, but
fuel retailers may use the tax credit toward each
of their locations. (continued on page 159)