FALLS CHURCH, Va. - President George W. Bush has signed into law a tax relief package that provides several benefits to contractors, according to the Plumbing-Heating-Cooling Contractors-National Association (PHCC).

  • First, the legislation extends for an additional two years the ability to increase to $100,000 the amount small businesses may expense annually, but limits opportunities to use the increased expensing for certain vehicle purchases. The provision expires in 2008.

  • The legislation also reduces from 39 to 15 years the depreciation period for qualified leasehold improvements. Leasehold improvements include retrofits and changes/modifications to property. If one performs work on a restaurant, for example, such property would also be depreciated over a 15-year recovery period.

  • Rules regarding S Corporations have been reformed and simplified, but a tax planner should be consulted for specific benefits.

  • There are also new rules regarding mobile machinery and when such equipment will be subject to taxation. Such new rules will be included in a U.S. Treasury proposed rulemaking.

    Publication date: 11/01/2004