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Taxes: What's new for 2012

20120101iabizHappy New Year! So what does the tax law have in store for you in 2012? 

For entrepreneurs, the biggest change in the tax law might be the new rules for fixed assets.  Congress has not re-enacted the rules allowing "100% bonus depreciation" for new fixed assets. Instead, "50% bonus depreciation" applies.  For qualifying property, taxpayers will be allowed to deduct half of the cost of fixed assets placed in service in 2012; the remaining half of the cost will be depreciated over a period of years under the "MACRS" rules.  For example, a taxpayer buying a $10,000 computer system would get to deduct $6,000 this year: $5,000 "bonus" depreciation and 20% of the remaining $5,000 cost ($1,000) under the usual rules for five-year property.

The "Section 179" deduction limitation for fixed assets has also changed this year.  Section 179 allows businesses to deduct the cost of fixed assets -- new or used -- that would otherwise have to be capitalized and depreciated over a period of years.  For 2011, up to $500,000 in assets qualified for Section 179 treatment.  That goes down to $139,000 in 2012.

A few other tax numbers for 2012:

Have a great 2012!

- Joe Kristan

Flickr image courtesy prettyinprint under Creative Commons license.

 

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