Trim Your 2007 Corporate Taxes
Considering the purchase of capitol equipment in the near future? If you are, here is some good news.
You just may be able to purchase new equipment and receive a significant discount with the blessing of the IRS.
Depreciate Up To $112,000.00 in 2007.
Take Advantage Of The Annual Depreciation Deduction
Your wholesale or distribution business may deduct the depreciation on tangible assets bought during the year, such as computer equipment, lift trucks and conveyor systems.
In fact, for newly acquired assets, (except for real estate) placed in service before year-end, the IRS allows six months of depreciation in the first year. However, if your company purchased more than 40 percent of the acquired assets during the fourth quarter, you must use the mid-quarter convention to compute the depreciation. (In the future, you can avoid using this less-favorable method by accelerating asset purchases planned for the fourth quarter into the third quarter.)
Internal Revenue Code Section 179 allows a business to deduct the cost of tangible assets purchased during the year instead of deducting it over a period of years.
For 2007, you can deduct up to $112,000.00 of the cost of these assets in the year purchased (you can deduct an even larger amount if your business is located in an enterprise zone, renewal zone or in a Gulf Opportunity Zone). The deduction available or 2006 was $108,000.00.
This deduction is phased out to the extent the cost of all qualifying property placed in service during the tax year exceeds $430,000.00. In addition, you cannot use this provision if your business has an operating loss for the year.