Letters: Taxes, Speed Limiting
Your Oct. 31 “Analysis” from The Associated Press, which was headlined “Small Business Tax Deduction to Shrink, Showing Importance of Year-End Planning” (p. 7), stated: “The maximum that can be deducted under the two deductions combined is $2 million.”
If that refers to the section 179 deduction and the bonus depreciation deduction, the information is not accurate.
There is no limit on bonus depreciation. The limit only applies to section 179, and the amount that can be deducted is $500,000 — and then it is limited dollar-for-dollar for every dollar the purchases for the year exceed $2 million.
For example, if a company buys $2.2 million worth of trucks — assuming no trade-in — the company can take a $2.2 million bonus depreciation deduction, assuming the transaction meets all the requirements.
If the company elects not to take bonus depreciation, then it can take a section 179 for $300,000 ($2.2 million minus $2 million limit equals $200,000, and $500,000 minus $200,000 equals $300,000) and then take the MACRS (modified accelerated cost-recovery system) three-year deprecation amount on the remaining $1.9 million.
Also, keep in mind that if a company can enter into a binding contract, it can take 100% bonus depreciation on the equipment in 2012, as long as it either (1) has paid for the equipment if it is a cash-basis taxpayer or (2) has secured financing and recorded the liability if it is an accrual-basis taxpayer.
So, if it is an accrual-basis taxpayer: Book the asset and the liability prior to Dec. 31, 2011, put the asset into service in 2012 and take 100% bonus depreciation on the asset in 2012.
This is not available if it has followed the proper procedures in securing a contract to build or has paid for the equipment in 2011. This is only available to transportation assets and other qualified long-lived property.
As always, consult your own advisers should you have questions.
Jeff Lovelady CPA
Bell & Company, Pa.
North Little Rock, Ark.
My father owns a high-output Corvette. My 18-year-old nephew — or anyone else — can get in that car and, until stopped in any means, can drive at the full limit of its ability. Yet those who favor mandated factory speed limiting somehow believe that I and other trained and/or experienced professional drivers should be limited to set speeds.
I’ll say it one more time: It is not logical for any person to be able to get in any noncommercial vehicle and drive at any speed he or she wants, while restricting trained and experienced professionals to set speeds.
My father was an accountant for several years. My mother was a registered nurse working in a nursery. I do not believe anyone would take a certified nursing assistant and place him or her in charge of a hospital nursery. Nor would anyone make a bookkeeper head of the accounting office.
Are you following me? We truly have sufficient evidence to frighten the dead with the results when those who make the rules have no physical experience with that over which they reign.
I have driven for roughly 10 years. Most of the trucks I have driven were governed. One was governed, ridiculously, at 97 mph. A couple of these trucks were governed when I was assigned to them and shortly thereafter became ungoverned. Amazingly, after taking the restrictions off a motor designed to run optimally wide open, my fuel mileage increased.
I know that how the truck is governed plays a major role in performance afterward. I also know that any time you restrict any engine or motor, you decrease its performance. Remember the difference between a 2-barrel carburetor and a 4-barrel? Ever heard of a turbocharger?
I believe that to restrict the professional and not the amateur when causation study after causation study clearly proves that the amateur driver is the most dangerous element on the roads is not logical. It’s not rational. It does not increase safety. And unless done in a specific way, it decreases fuel mileage.
When those promoting this lunacy move to restrict the ability of the amateur driver in the name of safety — and in the name of professionals’ blood pressure and heart rate — then we can talk.