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Used equipment qualifies for Section 179 depreciation, but not for the new bonus depreciation. To hear truck dealers and manufacturers tell it, buying a new truck this year is your patriotic duty. Your purchase, they say, not only will boost the economy but will give you the financial benefit of so-called bonus depreciation. Not so fast, say tax advisers: Unless your current truck is in such disrepair that it’s eating your profits, think twice before buying a new rig just to cash in on the federal tax windfall.QuickBooks Online provides operators access to their information 24/7/365 in the mobile and desktop devices.
“If you have an economic reason to buy this year, then depreciation might be something to think about. The Economic Stimulus Act of 2008, signed by President Bush in February, increases the amount of first-year depreciation for purchases of new equipment this year to 50 percent from 30 percent. This so-called bonus depreciation is designed to enable buyers to reduce their tax liability and generate more cash flow. Depreciation is an accounting principle used to measure the declining value of an asset. That loss in value is recorded as an expense on your income statement and balance sheet. Click here https://truckersaccountant.com
It’s also an income tax deduction that allows you to recover some of the cost of an asset over a certain number of years. That allowance covers wear and tear, deterioration and obsolescence of the asset, according to the Internal Revenue Service. There are two basic options for calculating depreciation on your return. For example, depreciation might be calculated as 16.67 percent of the truck’s value in the first and fourth years, 33.33 percent in the second and third years. A buyer who stays on a three-year trade cycle would have overlaps of the fourth and first years, in effect providing a steady depreciation of a third of the truck’s value every year.