Tax Law Alert: Congress Passes Economic Stimulus Package of 2008
2/8/2008

Congress yesterday passed the Economic Stimulus Package of 2008 (the Act), which President Bush has indicated he will sign into law. The primary focus of the Act is to provide a 2008 tax credit to individual taxpayers. The amount of this credit generally will be $300 to $600 for individual filers ($600 to $1,200 for joint filers), plus $300 per child, reduced, but not below zero, by 5 percent of the taxpayer's adjusted gross income in excess of $75,000 ($150,000 in the case of joint filers). Eligible taxpayers will receive advance rebate checks beginning around May 2008 based on their 2007 tax status. Other noteworthy tax provisions of the Act include:

• Increase in Expensing Limitation for IRC § 179 Property. Currently, a taxpayer can elect to deduct immediately, rather than depreciate over time, up to $128,000 of the costs of certain depreciable assets placed in service in 2008 (subject to phase-out if the cost of qualifying property exceeds $510,000). The Act increases the amount allowed as a deduction to $250,000 and the threshold for the phase-out to $800,000 for qualified property placed in service in 2008.

• 50 Percent Bonus Depreciation. The Act increases the amount allowed as a depreciation deduction for certain depreciable property placed in service in 2008 (or 2009 for certain aircraft or property with a longer production period) to 50 percent of the adjusted basis of the property. The provisions of this bonus depreciation are essentially the same as the expired 30 percent bonus depreciation that was allowed for certain depreciable property placed in service in 2004 and 2005.

• No Extension of Production Tax Credits (PTC) or Investment-Based Tax Credits. The Act does not include the anticipated extension of either the production tax credit (PTC) or the investment-based energy tax credit for renewable energy projects. Proposed extensions of these credits are pending in other bills.

If you have questions regarding the foregoing or any other aspect of the Act, please contact one of the attorneys listed below.

IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.