Congress has given businesses, including jewelers, an unexpected lump of coal for Christmas which will affect their 2008 tax returns.
Specifically, Congress didn’t extend a package of about three dozen corporate and personal tax provisions due to expire Dec. 31. Those included the 15-year depreciation schedule for businesses who rent their locations.
Earlier in this decade, the old 39-year depreciation period was reduced to 15 years and was renewed annually, for the year ahead, in 2005 and 2006. An Alternative Minimum Tax bill sent to the President Dec. 20 for his signature originally included the package of extensions. However, that was stripped from the bill before it was passed by Congress.
That package of provisions will now move as a separate bill sometime in 2008. Whenever it is acted upon, business groups like the National retail Federation and Jewelers of America have already said they’ll push to make it retroactive to Jan. 1, 2008.
Refusing to extend the 15-year provision means the depreciation period will revert to the previous 39 year schedule after Dec. 31. The 39 year depreciation schedule will become the law Jan. 1, 2008.
Industry experts suggest that retailers should contact their accountants, who should have up to date information on the specifics and can advise them on how it will affect their individual businesses. Until a bill is signed into law changing that, businesses should expect to use the 39 years schedule, until told otherwise by their company accountant.