Thanks to one of our readers for the heads up on this information…
Back on February 7, 2008, the Economic Stimulus Act of 2008 was passed by both the House and Senate. As the title suggests, this bill was intended to stimulate the U.S. economy and there are some great tax incentives available much like the ones we saw after 9/11. What does this mean for the dental industry?
It means that Section 179 Expense Limit is temporarily increased from $128K to $250K for the fiscal year 2008. As if this weren’t enough, there is also a Bonus Depreciation, in which the doctor will be able to claim a special first-year depreciation of 50% of new property acquired and placed in service during 2008. This bonus depreciation is in addition to the regular depreciation and any Section 179 deduction claimed. Not only that, but the Deduction Phase Out directive has gone from $500K to $800K, meaning that the doctor will not lose anything off of the $250K deduction until he/she reaches $800K in purchases. To put this in “working” terms, let’s assume Dr. Jones purchases $400K in equipment (check with your accountant regarding eligible leasehold improvements) during 2008.
Maximum Section 179 deduction for 2008————————- $250,000
$400,000 minus $250,000——————————————$150,000
$150,000 x 50% special depreciation allowance—————–—$ 75,000
$75,000 remaining basis x 20% regular MACRS—————- —$ 15,000
Total depreciation allowed——————————————$340,000
Note: Based on 5 year depreciation schedule**
**Source Matsco
Please note that we are NOT tax professionals, I just played one on TV one time. ( I always wanted to use that line) Please consult you tax accountant if you have any questions.
DI
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