FORT COLLINS, Colo. – The courts, IRS, and Congress continue to churn out a high volume of tax developments that affect corporations and businesses.

On Feb. 13, President Bush signed the Economic Stimulus Act of 2008 into law. The centerpiece was a rebate provision that puts extra cash into the hands of most Americans. It also included two important business changes, The Coloradoan reports.

The Stimulus Act enhanced the option to currently deduct the cost of business machinery and equipment, instead of recovering its cost via depreciation over a number of years. It increased the amount that a business may expense from $128,000 to $250,000.

The expensing election begins to phase out when a business buys more than a specified dollar amount of expensing eligible assets.

The Stimulus Act increased this dollar amount from $510,000 to $800,000. Both changes enhance expensing as a tax option for more businesses and are in effect for tax years beginning in 2008.

In addition to the usual depreciation deduction allowed for business property, the Stimulus Act permits businesses to take an extra “bonus” depreciation deduction for the first year new assets are placed in service.

The bonus first-year depreciation deduction generally equals 50 percent of the cost of qualified property (most types of tangible property other than buildings and their structural components, improvements to certain types of leased property, and most software) acquired and placed in service during 2008.

The IRS has released the inflation-adjusted depreciation limits for business autos, light trucks and vans (including minivans) placed in service in 2008.

The IRS has allowed employers that use the accrual method of accounting and incur payroll taxes (Federal Insurance Contributions Act (FICA) tax and Federal Unemployment Tax Act (FUTA) tax) to take a deduction for bonuses and vacation pay in an earlier year than the year in which the amounts are paid in many cases.

Editor’s Note: Look for more on the stimulus package and how it relates to convenience stores in the June issue of NACS Magazine, which will also feature coverage of the 2008 NACS State of the Industry Summit in partnership with CSP.