What Fleets Should Know about the Taxpayer Relief Act
Within the 2012 Taxpayer Relief Act, the maximum amount of Section 179 deductions has been changed and bonus depreciation extended.
Within the 2012 Taxpayer Relief Act that aimed at avoiding the "fiscal cliff," what deductions and relief are available for fleets and small businesses?
Section 179 Deductions: This section of the tax code allows businesses to deduct the cost of certain new and used property, which includes certain motor vehicles, placed into service within the tax year.
REVISED LAW: The maximum deduction has been extended for companies with less than $2 million in qualifying capital expenditures for the 2012 and 2013 tax years to $500,000.
Bonus Depreciation: This provision allows small businesses to deduct the cost of new equipment purchased within the tax year. This is used after the $2 million limit in capital equipment purchases is reached, and can be used by businesses that will have a net loss in operating costs in 2013.
EXTENDED LAW: The Taxpayer Relief Act of 2012 extended bonus depreciation by permitting the depreciation of 50% of the cost of new equipment in the first year.
Other tax credits available to businesses include an R&D tax credit that had expired in 2011 that is retroactive for the 2012 tax year and applies to 2013.
There are additional credits available for small businesses that should be discussed with your tax adviser, as well as the deductions and credits discussed in this article, as this should not be used as official tax advice.
More information on Section 179 and bonus depreciation can also be found at www.section179.org.
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