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EFFECTIVE-DATING... WITH STIMULUS!

January 29, 2008

Now there's a headline that will bring in some folks Googling for something I won't be addressing here. To proceed...

The House of Representatives today passed its version of the bipartisan "stimulus" package. It includes rebates of $600 for most singles and $1,200 for most couples. It also gives us the effective dates and details for the "business" portions of the bill.

50% Bonus depreciation will use the same rules as the post-9/11 bonus depreciation, but will apply for property placed in service in calendar 2008. This will allow taxpayers to write off half of the cost of such property in the year of purchase, with the rest depreciated as usual. A special provision covers non-commercial aircraft and property with a life of 20 years or less that takes more than a year to build; such property placed in service before January 1, 2010 will qualify for bonus depreciation.

The expanded Section 179 deduction -- up to $250,000 for taxpayers purchasing up to $800,000 of equipment in a year -- will be effective for years beginning after December 31, 2007. That means it won't "stimulate" taxpayers fiscal-year taxpayers until their new fiscal year begins - in some cases, as late as next December, when any recession will probably be a memory. This seems unwise if you believe that this kind of provision does anything for the economy; you think you would let it apply in either the current or the subsequent fiscal year for instant stimulation.

Now the Senate will take its shot at it. Some Senators are already committed to smaller rebates so that they can give them to non-working old folks. Stay tuned.

Links:

Text of House Bill, H.R. 5140
Technical explanation of HR 5140
Ways and Means HR 5140 links page.

Tags: stimulus.