Tax Incentives Under the American Recovery and Reinvestment Act of 2009

March 10, 2009 The Legal Intelligencer

The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama Feb. 17. The act contains numerous provisions intended to provide a much-needed stimulus to the economy. This article focuses on those provisions of the act that are intended to provide tax incentives for businesses, especially small and midsized ones, to enhance their capital expenditures in 2009.

The act extends the "bonus" first-year depreciation deduction for new tangible property purchased in 2009 that was otherwise schedules to expire. Generally businesses are able to recover their investments in tangible property through depreciation over the recovery period and in accordance with the recover method (straight-line to accelerated), determined by the asset class of the property, in accordance with the Modified Accelerated Cost Recovery System, or MACRS, specified in Section 168 of the Internal Revenue Code.

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