The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 Economic Stimulus Act) contains a wide-ranging tax package that includes tax relief for businesses. However, there are certain calculations and deadlines that need to be met to take full advantage of the provisions.

• The Stimulus Act temporarily extends the higher Section 179 expense amounts available in 2008 for an additional year. Under this provision, business owners can elect to immediately expense up to $250,000 of qualified equipment purchased during the 2009 tax year, rather than depreciate it over time. This benefit will continue to phase-out on a dollar-for-dollar basis once qualified equipment purchases exceed $800,000.
• The Stimulus Act also extends availability of the 50% bonus depreciation provision for capital expenditures incurred in 2009 (2010 for aircraft and long-production-period property). This provision allows business owners to take 50% bonus depreciation in the year that the property is placed in service. In addition, the Stimulus Act extends the placed-in-service deadline for the $8,000 increase in first-year depreciation provision on qualified vehicles placed in service by December 31, 2009.
• The current difficult economic situation has likely caused many businesses to incur a net operating loss (NOL) in 2008. Before the Stimulus Act, NOLs could generally be carried back only two years and, if there was a tax liability in those two years, taxes paid could be refunded to the taxpayer. For 2008 NOLs, the Stimulus Act extends the two-year carry-back to three, four, or five years increasing the likelihood, availability, and amount of the refund to enhance the business’s cash flow.
• Other business provisions of the Stimulus Act include an increased exclusion amount for a gain from the sale of small business stock, easing of the built-in-gains rules, delayed recognition of certain cancellation of debt income, and incentives to hire unemployed veterans and disconnected youth.