2012 Critical Year for Tax Policy

50-Percent Bonus Depreciation Still Available Until 2013

* The expensing cap and phase-out amounts will revert to $25,000 and $200,000 respectively in 2013.

* Unlike bonus depreciation, expensing applies to both new and used qualifying property, and is subject to annual dollar, investment and taxable income limits.

• The refundable corporate AMT (Alternative Minimum Tax) credit continues.

* Specifically, corporations will be able to utilize their AMT credits in lieu of bonus depreciation on property placed-in-service in 2011 and 2012.

* This election will allow a taxpayer to “monetize” its AMT credits generated before 2006, and will equal the lesser of 20 percent of the additional first-year bonus depreciation foregone, or 6 percent of the AMT credits generated before 2006 that were available for the first taxable year ending after March 31, 2008.

* However, in no event will the credits be allowed to exceed $30 million, and straight-line depreciation must be used for such property. There are also special rules for corporations that are part of controlled groups or partnerships.

NPES cautions that this article is solely informational and does not constitute legal, financial, investment or other advice from NPES. Readers are advised to seek professional counsel from their own financial, accounting and legal advisors to apply these incentives and other tax laws to their particular circumstances.

For more information, contact NPES Government Affairs Director Mark J. Nuzzaco at (703) 264-7235 or mnuzzaco@npes.org.

Source: NPES.

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