New BNA Software Calculates Fresh Changes In Tax Law

by Mike Godfrey, Tax-News.com, Washington

09 June 2003

Tax software specialists BNA Software have developed an internet-based fixed assets platform that takes into account changes in the tax law brought about by the enactment of the Jobs and Growth Tax Relief Reconciliation Act, recently signed into law by President Bush.

Released some 48 hours after the President put pen to paper, BNA claim that businesses can use the tool to immediately start taking advantage of the changes in the law relating to fixed assets, worth around $60 billion in the next three years.

According to Michael Smith, General Manager of BNA, the new development means that the company is "uniquely positioned" in the market place to provide clients with a comprehensive update of the new tax laws. Smith claims that this has been possible due to BNA's ability to closely scrutinize the final stages of the legislation and interpret the appropriate data accordingly. The retroactive elements of the tax changes will also be factored into the software, according to Smith.

The new tax laws affect fixed assets in three broad categories, including bonus depreciation; Section 179 expensing; and luxury vehicle deduction.

The 2003 Act increases bonus depreciation deduction and extends the period for taking advantage of it to December 31, 2004. The allowable deduction is now 50% of the adjusted basis of qualifying property. It applies generally to the same property that qualified for the 30% deduction but must now be acquired after May 5, 2003 and before January 1, 2005.

The 2003 Tax Act increases the maximum dollar allowable amount for Section 179 expense to $100,000 (it was $25,000) for qualifying property placed in service in tax years beginning in 2003 through 2005. In addition, it increases the investment phaseout threshold to $400,000 (it was $200,000) for qualifying property placed in service in tax years beginning in 2003 through 2005.

The 2002 Tax Act increased the allowable amount of depreciation for property that both qualifies for bonus depreciation and is also a luxury vehicle. The increase in the allowable amount was $4,600 for the year in which the vehicle was placed in service. Now, the 2003 Tax Act increases this to $7,650 on qualifying vehicles, in addition to the regular allowable limit.

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