Did you know instead of claiming regular depreciation deductions for business assets, you can deduct up to $20,000 of the cost of assets placed in service in 2000? This "expensing" allowance can be used for assets placed in service anytime during the year. In fact, your company may be able to use this tax break to avoid the last-quarter tax limitation for depreciation deductions.

The annual expensing allowance is scheduled to increase gradually over the next few years. From 2001-2002 the maximum expensing allowance will be $24,000. In 2003 and following years the maximum amount will be $25,000.

The amount of your expensing deduction is limited to the amount of your business’ taxable income. In other words, you can’t claim an expensing deduction for business assets if you show a tax loss for the year. However, any excess can be carried over to future years.

For more information on this topic, contact Ellis & Associates, CPAs, P.A. at (410) 256-9298.