• The maximum immediate expense deduction which increased from $125,000 to $250,000 of total qualified purchases in 2008 has been extended through 2009.
• Businesses with up to $800,000 in property purchases are eligible for this deduction, replacing the previous $500,000 limit.

B) Bonus Depreciation

• There is a bonus first year depreciation deduction of 50% of the cost of eligible purchases - similar to what was enacted after S ept. 11, 2001.
• This incentive is available for purchases of new furniture, but orders must be placed after Jan. 1, 2008 and, in general, installed before Jan. 1, 2010.

This means that if you are considering buying furniture in either 2010 or 2011, you may be financially better off moving up your purchase to 2009. Additionally, if you are considering buying used furniture, you may be better off buying new because the bonus depreciation tax benefits are available only for new furniture. For example, if you buy $800,000 of furniture in 2009 with a seven year tax life, you may be able to expense $250,000 immediately, deduct an additional $275,000 of bonus depreciation in 2009, and also deduct $39,000 of normal first year depreciation. This would result in a total first year deduction of $564,000 of your $800,000 purchase. If you decide to wait until 2010, then you would only be able to deduct $114,000 in the first year. The benefit is that you get to keep your tax money longer compared to the normal seven year tax depreciation in the example. Only small and medium size companies will likely be able to take advantage of the increased expense deduction, but everyone will be able to use the bonus first year 50% deduction for qualified property purchased.

Bottom Line
The tax savings are immediate and significant for companies who buy furniture in 2009, rather than waiting until 2010 or 2011. Contact your tax advisor to see if you qualify, and your IOS representative to see which furniture solution is best for you.