As a part of the Economic Stimulus Act of 2008 signed into law on February 13 by President Bush, two key provisions provide significant benefit to manufacturing companies.

The new law almost doubles the amount of deductible Code Sec 179 expensing for 2008 to $250,000 and increases the threshold for reducing the deduction to $800,000. It applies to property purchased and placed in service in tax years beginning in 2008. This is especially beneficial to small businesses purchasing equipment.

Further, the Act also provides temporary bonus depreciation to encourage business investment. Property must be eligible for the modified accelerated cost recovery system with a depreciation of 20 years or less, and must be purchased and placed in service during 2008. The new law provides qualifying taxpayers 50% first year bonus depreciation of the adjusted basis of qualifying property.

This information is provided as a service only. For clarification and further information, please contact an accounting professional.