Federal Stimulus Package:

 

 

fFor Individuals and Small Business to benefit Alpaca Breeders.

 

President Bush signed the legislation for the stimulus package on February 20 2008.  The new package includes important incentives for business, including one especially beneficial to alpaca breeders.  Specifically it includes an increase in the small business “expensing limitation” for the tax years beginning in 2008.  The law increases the amount that individuals or small business may deduct for purchases of certain business assets, equipment, and other items in the year those items are acquired and put in use.  Under the new law, the maximum deduction rose to $250,000.  This is commonly referred to as “section 179 expensing” after the IRS code section 179.    

Alpaca Translation:  The new law increases the amount that alpaca breeders both new breeders and existing breeders may deduct for purchases of breeding stock.  This includes alpacas purchased on credit and paid for over more than the current tax year.  Your tax savings could potentially be more than your down payment. 

For example:  You purchase four foundation female suris for a total of $100,000.00.  You agree to pay 20% down at the time of purchase and finance the balance over 3 years.  The new law allows you to take the entire purchase price of $100,000.00 as a deductible business depreciation expense this year.  If you fall in the 35% income tax bracket, your tax savings would be $35,000.00.  Your 20% down payment equates to $20,000.00.  Thus in this theoretical example you generate a positive cash of $15,000.00. 

Tax savings                 $35,000
Down payment           $20,000
Positive cash               $15,000

For more details on the stimulus package, check the IRS website -

 

As always, speak with your accountant or tax professional for specific tax advice.

 

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