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Iowa House Ways and Means passes coupling with $500K 2010 Section 179 limit AND bonus depreciation

February 22, 2011

The Iowa House Ways and Means Committee has given Iowa businesses another reason to take their time finishing their 2010 returns. Rod Boshart reports at Eastern Iowa Government.com:

The House Ways and Means Committee voted 17-7 to “couple” Iowa tax law with the federal tax code to allow small businesses to make equipment purchases and use tax advantages to generate economic activity and job growth. Unlike the Senate, however, they made the bonus depreciation provisions effective for the 2010 tax year to provide immediate benefits rather than delaying their implementation in the 2011 tax year as senators proposed.

The Senate "coupling" bill made the $500,000 Section 179 limitation effective for 2010; without coupling, Iowa taxpayers could only use Sec. 179 for up to $134,000 in 2010. Section 179 allows a current deduction for assets that would otherwise be capitalized and expensed over a period of years via depreciation deductions.

By allowing taxpayers to use the "bonus depreciation" provisions for 2010, the House Ways and Means version of SF 209 would allow taxpayers to write off 50% (100% for post-9/8/2010 purchases) of the cost of more new business assets. As bonus depreciation has fewer limits that Section 179, and can generate net operating losses, this would make a big difference in 2010 tax returns currently being prepared.

Related:

Coupling bill passes Iowa Senate with $500,000 2010 Sec. 179 deduction

Bonus Depreciation and Farm Buildings

Bush-rate extension passes; what it means

Tags: bonus depreciation.coupling.Iowa bonus depreciation.Iowa tax policy.Rod Boshart.SF 209.

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