An alpaca can typically be depreciated over a five-year span or 20% per year and, in addition, the 2008 Economic Stimulus Bill changed Section 179 of the tax code to allows for the deduction of a capital asset up to $250,000 for assets up to $800,000 put into service in 2008. Additionally, businesses are now allowed a 50% bonus depreciation on assets placed in service in 2008.
Economic Stimulus Act of 2008 Tax Incentives
Business owners can elect to expense up to $250,000 (increased from $128,000) of qualifying property (up to $800,000 in value) instead of taking depreciation for assets put into service in 2008. Alpacas are assets.
Businesses are now allowed a 50% bonus depreciation on assets placed into service in 2008.
Here is an example of how these new tax benefits can be calculated:
A $500,000 asset is placed into service in 2008
$250,000 may be expensed under Section 179
$250,000 remains to be depreciated
A further $125,000 may be expensed as Bonus Depreciation (50% of $250,000)
Asset now has a $125,000 base from which to take standard 1st year depreciation
For this example we'll assume 5-year property = $25,000 1st year depreciation
Total deduction in 2008 is $400,000 on the asset
Remaining $100,000 cost of the asset is recovered under the otherwise applicable rules for computing depreciation
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