2010 Business Income Tax Depreciation / Research Credit

As of today, the following business tax breaks expired at the end of 2009 and are no longer available in 2010: 50% bonus depreciation on new business equipment / fixed assets, including the extra $8,000 automobile first-year depreciation deduction; research credit. Also, IRC Section 179 “depreciation” / “expense election” of $250,000 drops to $134,000 (California tax amount is still $25,000) and the phase-out starts at $540,000 rather than $800,000 (California tax amount remains at $200,000).

California Limits NOL’s and Business Credits

For 2008 & 2009, California taxpayers with net business incomes of $500,000 or more cannot take a net operating loss (NOL) deduction and their use of business credits is limited to 50% of their tax liability. Common credits involved include the Research and Development Credit, Low Income Housing Credit, and Enterprise Zone Credit, and credits not allowed are carried over to future years.