Cash Benefits for ShoreTel Customers through the Small Business Jobs Act of 2010
The Small Business Jobs Act of 2010 could help you keep cash in hand by providing increased tax benefits.
The Act may provide customers with an additional tax deduction or a section 179 expense reduction. The act is retroactive to January 1, 2010 and all telecommunications equipment should qualify.
Purchases must take place in calendar year 2010 for the bonus depreciation or in 2010-2011 for the section 179 expense reduction.
These benefits should accelerate recovery of capital expenditures, and result in delaying the payment of cash taxes to future years while keeping cash in the hands of businesses longer to encourage reinvestment.
The Act allows a business to depreciate an additional 50 pecent of the cost of an asset both acquired and placed in service in 2010. The 50 percent deduction is added to the “normal” depreciation calculation for that asset.
The property eligible for bonus depreciation includes purchased computer software; tangible property with a recovery period of less than 20 years; qualified leasehold improvement property; and, water utility property.
Communications equipment generally has a recovery period of 5 years, and communications software generally has a recovery period of 3 years.
The bonus depreciation will also be allowed for the alternative minimum tax (AMT).
The Act nearly doubles the maximum amount businesses can deduct under Section 179. Assets above the 179 deduction can have bonus depreciation included.
Businesses can expense up to $500,000 of assets in the year purchased (previously $250,000), and the phase out threshold is raised to $2,000,000.
ShoreTel is advising customers to consult with their tax advisers and be prepared to act quickly, as some of the benefits expire at the end of 2010.