Great News for starting an alpaca business this year, or expanding the one you have with another alpaca purchase… this year. The best time is now… to take advantage of the changes to the Section 179 expensing. Let me explain…
On September 27, 2010, President Obama signed the Small Business Jobs Act of 2010. The legislation contains $12 billion in tax incentives. The major tax provisions of this bill that affect alpaca purchases are as follows:
• Sec. 179 Expensing – “The maximum Sec. 179 expense deduction for fixed asset acquisitions (alpacas qualify) has been increased from $250,000 to $500,000 for tax years beginning in 2010 and 2011. The enhanced deduction starts to phase out once qualifying fixed asset additions reach $2 million and is fully phased out when they exceed $2.5 million.
• Bonus Depreciation – The 50% bonus depreciation, which had expired at the end of 2009, has now been extended through December 31, 2010. Bonus depreciation can be used to deduct 50% of the cost of new assets purchased in 2010 that do not qualify for the Section 179 expensing.” (Excerpt from Tax & Business Alert bulletin from the CPA firm of Gish Seiden, LLP in Woodland Hills, CA – 818.854.6100]
What this means for you – the alpaca owner.(1) You can elect to immediately expense up to $500,000 of qualified equipment (alpacas qualify as equipment) purchased during the 2010 tax year, rather than depreciate it over time. (In tax year 2009 the ceiling amount maxed out at $250,000 for the year and phased out when the qualified purchases reached $800,000.)
(2) You can take this depreciation this year and next year. So, you can plan your alpaca business acquisitions out for two tax years.
(3) Talk to your accountant about how this immediate depreciation can affect your present tax situation. Ask them about the best ways to expense these purchases and write them off against your “ordinary income”.
(4) One of the ways I took advantage of this expensing was to start a contract with multiple purchases and make a down payment before the end of the year. We wrote the agreement that I would make monthly payments extended out for the next six months. However, my CPA wrote off the whole purchase as If I had paid for it in full. Check with your professional to see if this could help your tax situation out this year.
Remember that I am only relaying this information to you. I am not giving you accounting advice. Please see a professional that can explain how this helps your personal tax situation and the potential for building your wealth with alpacas.
If you are looking for quality alpacas for less this year or next… go to: http://buyingalpacasmadesimple.com to preview some quality alpacas for sale right now. Complete the inquiry form and I will be notified so that we can have a discussion about your interest.
Here’s to your successful alpaca adventure