U.S. Congressman Pat Tiberi (R-OH) today announced the introduction of H.R. 4196, a bill to help spur economic recovery and jumpstart job creation. The bill would help companies better access capital, invest in new facilities and create American jobs by extending 100 percent bonus depreciation through 2012, lifting some restrictions to allow certain tax credits to be used for capital reinvestment, and ensuring more companies can take advantage of bonus depreciation.
"I've heard time again from small business owners in Ohio, that extending bonus depreciation is the single, biggest factor in allowing their businesses to grow this year," said Congressman Tiberi, Chairman of the Ways and Means Subcommittee on Select Revenue Measures. "Allowing job creators to use these tools for capital reinvestment is a common-sense way to encourage job creation."
Specifically, the bill:
Extends 100 percent Bonus Depreciation Through 2012. From September 2010 through the end of 2011, businesses could elect to immediately deduct the cost of qualifying purchased property. For 2012, businesses can only elect to deduct 50 percent. This measure would extend businesses' ability to deduct the full cost of the property through the end of 2012.
Lifts Restrictions To Allow For More Corporate Alternative Minimum Tax Credits To Be Used for Capital Reinvestment. The current economic situation has caused many companies to operate at a loss, hampering their ability to take advantage of bonus depreciation. Through 2012 businesses may forego bonus depreciation and instead claim some of their unused Corporate Alternative Minimum Tax credits. The bill would allow for more of these credits -- which are essentially overpaid taxes -- to be used for capital investment.
Ensures That Companies Using The "Percentage Of Completion" Method of Accounting Can Take Advantage of Bonus Depreciation. Many companies that enter into long-term contracts use the "percentage of completion" accounting method. The bill would ensure that these companies can take advantage of bonus depreciation.
These measures were previously included H.R. 3630, the payroll tax holiday extension, passed by the U.S. House of Representatives in December 2011. They were not included in the payroll tax holiday extension conference agreement.