American Taxpayer Relief Act

Congress has enacted the American Taxpayer Relief Act of 2012 (2012 Taxpayer Relief Act), which provides significantly increased incentives for business investment in capital and equipment.

The 2012 Taxpayer Relief Act extends the 50-percent first-year bonus depreciation allowance for one year to apply to qualifying property placed in service through 2013 (through 2014 for certain longer-lived and transportation property). The bonus depreciation allowance rate of 50 percent remains unchanged.

Under the extension provisions, a corporation also is permitted to increase the minimum tax credit limitation by the bonus depreciation amount with respect to certain property placed in service after December 31, 2007 and before January 1, 2014 (January 1, 2015 in the case of longer-lived and transportation property).

After much debate and anticipation, Congress has passed the American Taxpayer Relief Act of 2012 which averts the tax side of the fiscal cliff, provides numerous extenders and avoids the automatic sunset provisions that were scheduled to take effect after 2012 under the “Bush-era” tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA<) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA<).