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Congress Passes Economic Stimulus Act of 2008
On Feb. 7, both the Senate and House of Representatives
passed H.R. 5140, the "Economic Stimulus Act of 2008"
(Stimulus Act). The measure is thus cleared for the
President's signature. Details on the Stimulus Act will
be available on tomorrow's Checkpoint© Federal Tax
Updates Newspage.
New Rebate. An eligible individual will receive a
basic rebate equal to the greater of: (1) his net income
tax liability up to a maximum of $600 ($1,200 for a
joint return); or (2) $300 ($600 for a joint return) if
either (a) the taxpayer's qualifying income is at least
$3,000; or (b) his net income tax liability is at least
$1 and gross income is greater than the sum of the
applicable basic standard deduction amount and one
personal exemption (two personal exemptions for a joint
return). Qualifying income is earned income generally,
veterans' disability payments (including payments to
survivors of disabled veterans), and social security
benefits. There will be an additional $300 per-child
credit amount. The amount of the rebate (both the basic
and the child's amount) phases out at a rate of 5% of
adjusted gross income (AGI) above $75,000 ($150,000 for
joint returns). The rebate won't be available if an
individual's tax return does not include valid
identification numbers (Social Security Numbers issued
by the Social Security Administration).
Boosted Sec. 179 expensing. For tax years
beginning in 2008, the Stimulus Act increases the
$128,000 expensing limit to $250,000 and boosts the
overall investment limit from $510,000 to $800,000.
Bonus first-year depreciation. The Stimulus Act
generally permits a bonus first-year depreciation
deduction of 50% of the adjusted basis of qualified
property acquired and placed in service after Dec. 31,
2007, and before Jan. 1, 2009. The otherwise applicable
“luxury auto” cap on first year depreciation increases
by $8,000 for vehicles that qualify. In general,
property eligible for bonus depreciation consists of:
(1) tangible property with a recovery period not
exceeding 20 years; (2) purchased computer software; (3)
water utility property; and (4) qualified leasehold
improvement property. Bonus depreciation will be allowed
for alternative minimum tax (AMT) as well as for regular
tax purposes.
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