IPC Efforts Pay Off – Research and Development Tax Credits and Enhanced Bonus Depreciation Legislation Will Be Enacted in to Law

President Obama is scheduled to sign into the law today the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” more commonly known as the “Tax Cuts Bill.” The Act will reinstate and extend important tax benefits assisting electronics companies. IPC worked all year to support these important tax provisions to provide assistance to U.S. electronics manufacturers. The Tax Cuts Bill will seamlessly reinstate research and development (R&D) tax credits for 2010 and extend them through 2011. Additionally, the bill will provide 100 percent bonus depreciation for investments placed in service after September 8, 2010 and through December 31, 2011.

Reinstatement and extension of R&D tax credits 

R&D tax credits are critical in enabling electronics companies to compete globally. The pace of technological advancements in the electronics industry is continuous and R&D is essential for companies to maintain the ability to produce state-of-the-art electronics products. U.S. businesses need R&D tax credits to compete globally and remain profitable and viable. Strong companies will contribute to new hiring and retention of current staff.

Throughout 2010, IPC has been urging members of Congress to enact legislation reinstating and permanently extending R&D tax credits. To amplify our efforts, IPC joined forces with the R&D Credit Coalition to urge Congress to pass the extension of tax provisions including the R&D tax credit. Lead by the IPC Government Relations (GR) Committee, IPC and its members met with legislators during events such as IPC Capitol Hill Day and at plant tours hosted by IPC member facilities. IPC and its members also delivered letters to members of Congress urging them to enact legislation seamlessly extending R&D tax credits through 2010 and for as long as possible.

Enhancement and extension of bonus depreciation  

The enhanced bonus depreciation benefit to be enacted into law today expands the current benefit. Under existing bonus depreciation law, businesses are allowed to recover 50 percent of the cost of capital expenditures over time according to a depreciation schedule. The bill to be signed into law today will extend and temporarily increase the bonus depreciation benefit to 100 percent for investments placed in service after September 8, 2010 and through December 31, 2011. For investments placed in service after December 31, 2011 and through December 31, 2012, the bill will extend the current 50 percent bonus depreciation.

IPC and its members have long advocated for enhanced bonus depreciation benefits to assist electronics companies. Because of the rapid advances in electronics manufacturing, companies must continually invest in new equipment in order to remain competitive. Bonus depreciation is especially helpful in tough economic times because businesses can continue to purchase new equipment and write off the investment at a faster rate. Congress’s enactment of enhanced bonus depreciation can help companies to purchase much needed equipment that will allow them to remain globally competitive.

For more information please visit www.ipc.org/bonus-depreciation

For a full explanation of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” H.R. 4853, please visit: http://finance.senate.gov/legislation/details/?id=10874ed6-5056-a032-52cd-99708697eff0

One Comment

  1. Mike Rogers
    Posted July 8, 2011 at 10:17 am | Permalink

    Really helpful post about tax relief, this bill should benefit electronics companies… Thanks for sharing this and i hope other readers will find this helpful too, Mike

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