Expanded Section 179 Expense Election -- Extended into 2009
The Section 179 deduction dollar and investment limitations, first increased for tax years beginning in 2008, have been extended for tax year 2009. This remains nearly double the prior limit. Under IRS Section 179, up to $250,000 may be deducted from your taxable income, if you acquire and place into service new or used equipment prior to January 1, 2010. The deduction is reduced "dollar-for-dollar" to the extent that capital purchases of eligible equipment exceed $800,000, until it is completely phased out if total purchases equal or exceed $1,050,000. This "first-year" deduction can be applied to one, several or the total of all qualifying asset purchases. The deduction may be limited by your pre-deduction taxable income.

50% Bonus 1st Year Depreciation -- Extended into 2009
The new law extends into 2009 the 50% bonus depreciation expense allowance that applies to eligible new equipment purchased and placed into service during the year. This will allow you to claim an additional first-year depreciation bonus equal to 50% of the adjusted basis of "qualified property." The adjusted basis is the Equipment Cost less Section 179 Depreciation, if applicable. If Section 179 does not apply, then Equipment Cost is the basis.

Normal 1st year Depreciation:
For tax year 2009, qualified Ag equipment purchases can be depreciated over 5 years instead of the usual 7 years. This also allows for a faster write-off. First year depreciation for Ag equipment of 15.00% (20% for CE equipment) of your remaining cost may be deducted on equipment placed into service during the year. Remaining cost is defined as Equipment Cost less the Section 179 Deduction, if applicable, and 50% Bonus Deprecation, if applicable. If Section 179 depreciation does not apply, then the remaining cost of your equipment purchase will be Equipment Cost less 50% Bonus Depreciation.

Total 1st Years Depreciation Deduction:
Total of Section 179 Deduction, if applicable, 50% Bonus 1st Year Depreciation Deduction and Normal 1st Years Depreciation Deduction based on the equipment investment you entered.